ABSTRACT
The introduction of stricter capital adequacy regulations in Japan under the Basel Accord is often blamed for bringing on a “capital crunch”: a reduction in bank lending in response to stricter regulations on bank capital. The capital positions of Japanese banks have been under pressure from several factors throughout the 1990s and pressure on banks to raise their BIS (Bank for International Settlements) capital adequacy ratios has been cited as a cause of the reduction in aggregate lending in the 1990s.
