Post-War Foundations
Which country occupied Japan after WWII and coordinated the reconstruction?
United States
How did this crisis affect Japan's economy in the long run?
Prolonged period of stagnation and deflation
What is Prospect Theory?
The idea that losses feel worse than gains feel good, pushing decision-makers toward risk-avoidant choices
In what ways can behavioural and ethical awareness be implemented into the education of financial professionals?
Teaching future professionals to recognize bias and understand their ethical responsibility to the public
What is quantitative easing, and why was it controversial?
BOJ buying government bonds to stimulate lending, criticized for increasing inequality and public debt
When did the American occupation of Japan officially end?
1952
What was the long-term problem Japan faced throughout the 1990s?
Weak growth, deflation, and a slow, drawn-out recovery
Which behavioural bias caused officials in the BOJ to delay any actions after the bubble burst?
Loss aversion and status quo bias
What ethical duty do banks hold towards the public?
Maintaining transparency, fairness, and financial stability
Which country was the first to implement quantitative easing?
Japan
How did World War II influence Japan’s post-war economy?
Forcing reconstruction under US guidance
Why did banks keep their non-performing loans?
To avoid admitting losses and protect their balance sheets
Which behavioural pattern discusses a financial institution copying another’s risky actions?
Herd behaviour
Why is it important for banks and regulators to act ethically in finance?
Unethical behavior undermines trust and can worsen economic crises
Which two industries led the export boom in Japan during this period?
Manufacturing and technology
What caused a trade imbalance in the first place?
Japan’s massive export surplus created by a weak yen
What are “Zombie banks?"
Insolvent banks kept alive by rolling over bad loans instead of writing them off
What is herd behaviour, and how did it affect investing?
Institutions copying each other’s speculation, fueling the bubble
How did the lack of transparency influence Japan's housing market?
Hiding bad loans delayed the correction and the crash got worse
What does the Hikikomori, or “shut-in” phenomenon refer to?
Long-term social withdrawal caused partly by unemployment and economic hopelessness
How did Japan’s relationships with its trade partners affect its economy?
US applied pressure over the huge trade imbalance, leading to the Plaza Accord
What caused Japan’s already decentralized economy and poor financial regulations to worsen the economic downturn?
Weak oversight, delayed action by the BOJ, and the failure to acknowledge bad debt
What is excessive optimism, and how did it affect the market?
Assuming asset prices would keep rising, which encouraged reckless risk-taking
How can banks introduce behavioural finance insights to prevent future crises?
Recognizing common cognitive biases and using them to guide better risk management
How many people in Japan live as Hikikomori today?
Around 1.5 million