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Japanese banks tend to have very low ROA's and earn reasonable returns only through high leverage. They also never charge enough for consumer services. This means that as soon as there is stress in the system earnings crash. Once banks start to feel the pressure they are forced to cut lending in a big way. This undercuts the economy.

I couldn't locate the data, but I believe Japanese companies lag in bond financing (they are flush with cash). Once the banks stop lending the medium and small businesses start hurting...

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