When did the Japanese economy experience a recession following the decline in asset prices?
A3. The Japanese economy experienced three recessions between 1992 and 2003. The first recession, resulting in part from the bursting of the Nikkei bubble and in part from restrictive interest rates, officially started in April 1992, although headline industrial production had been contracting since Q2 1991. The official recession lasted until March 1994. Q4. How did the balance sheets of households and companies fit in to all this? A4: Households and firms had borrowed to buy assets, with the former increasingly buying on credit and companies leveraging overvalued assets. Consumer credit growth peaked at just over 80% on the year by the end of 1988, but had fallen to 53.6% one year later when the Nikkei peaked, and by Q4 1992 consumer credit went into a prolonged period of contraction. Corporations began having problems financing their excessive loan portfolios in 1992, and reported non-performing loans (NPLs) rose by over 50% on the year. At the time, there were fears that the ratio
