Loan demand is set to surge as firms’ revenues slump in the wake of virus outbreak. Unfortunately, Japanese banks will probably respond to the economic downturn by tightening lending standards. Most large firms should be able to cope, but many smaller firms will struggle as the support measures rolled out by the government are too small in scale and may not become available in time. The upshot is that corporate bankruptcies are going to rise, increasing the strain on the country’s ailing banks.
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