The Japanese economy was seen as a role model for other emerging economies which were striving for consistent economic growth and it was all set to take over the US by the 1990s. However, Japan experienced structural problems that pushed the economy deep into stagnation. The economic growth of Japan during the late 1990s was around 0.8%. The economy faced some severe problems like drastic increase in its fiscal deficit and accumulated debt. The ‘asset bubble’, and the collapse of stock markets in the 1990s followed by South East Asian crisis in late 1990s affected the fortunes of the banking industry in the country. The non-performing assets in the Japanese banking industry were one of the highest in the world, leading to bankruptcy of many banks in the economy. Though the government initiated measures to bring the economy back on to the track of economic growth, nothing great has been achieved as the economic woes still continue.
