Outstanding bank loans in Japan 2015-2024
As of March 2024, outstanding bank loans of banks in Japan amounted to around 604.7 trillion Japanese yen, up from about 577.2 trillion yen in the previous year.
Bank lending in Japan
Domestic credit granted to the private sector by commercial banks accounted for around 121.8 percent of Japan’s gross domestic product (GDP) in 2022. Although city banks are the largest banks in Japan, loans of regional banks made up the largest share of outstanding domestic loans of financial institutions, followed by city banks. This reflects the large number of regional banks and their role in providing financial services to individuals and small and mid-sized businesses at the regional level. Regional banks were identified as main banks by a significant proportion of businesses in 2021. This was especially evident in rural areas, while a large share of companies in more urban regions such as Kanto and Kinki identified city banks as their main banks.
Non-performing loan problem in the 1990s
As a consequence of the burst of the asset price bubble in the 1980s and the recession in the following decade, Japan was confronted with a non-performing loan problem that lasted into the early 2000s. The financial crisis led to a number of banks and financial institutions going bankrupt, and a high ratio of non-performing loans. During that time, several trillion yen of bad loans were disposed of. To strengthen the financial system and establish regularities for dealing with failing financial institutions, the Financial Reconstruction Act (FRA) was passed in 1998. In more recent years, the non-performing loan ratio of banks has stood at around one percent.
