The key objective of the paper is to present aspects of the Japanese banking crisis against the background of the country' overall economic performance. The macroeconomic situation of any country fundamentally influences the position of its banking sector, affecting directly all its individual participants.

The choice of Japan is not accidental. It serves to emphasise the point that even countries perceived as financial superpowers are not immune to serious financial crises.

The contents of the paper can be summarised in four points:

First, it describes the success and failure of the Japanese economy, along with their possible causes and consequences.

Next, the author discusses the role of "external" institutions - such as the Ministry of Finance, the Bank of Japan and the Corporation for Deposit Insurance - in the shaping of the banking environment in Japan.

Further, the author describes the specifically Japanese risk features of banks' policy. These include their considerable involvement in company clusters ("keiretsu"), inaccurate assessment of borrowers' financial standing, considerable and imprudent involvement in property financing.

Finally, the paper presents the measures undertaken by the Japanese authorities (including the establishment of new institutions, regulatory changes, bank nationalisations, and the implementation of the so-called reform.coms), designed to prevent further crises.

The analysis of the Japanese banking crisis reveals the complexity of its causes and suggests a long and painful path out of it, calling for both the use of macroeconomic instruments and activities at the micro level.