Squeezed at home by razor-thin margins and negative interest rates, Japanese banks have more than doubled borrowing and lending in dollars since 2017. Why is this practice risky? Japanese banks are exposed to liquidity risks due to difficulty in pulling funds out of foreign countries in a short time period. Japanese banks are exposed to interest rate risks due to uncontrollable rate changes outside the jurisdiction of Japanese central bank. Japanese banks are exposed to default risks due to lending to foreign borrowers. Japanese banks are exposed to exchange rate risks due to mismatched assets and liabilities in different currencies.
Squeezed at home by razor-thin margins and negative interest rates, Japanese banks have more than doubled borrowing and lending in dollars since 2017. Why is this practice risky? Japanese banks are exposed to liquidity risks due to difficulty in pulling funds out of foreign countries in a short time period. Japanese banks are exposed to interest rate risks due to uncontrollable rate changes outside the jurisdiction of Japanese central bank. Japanese banks are exposed to default risks due to lending to foreign borrowers. Japanese banks are exposed to exchange rate risks due to mismatched assets and liabilities in different currencies.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Squeezed at home by razor-thin margins and negative interest rates, Japanese banks have more
than doubled borrowing and lending in dollars since 2017. Why is this practice risky?
Japanese banks are exposed to liquidity risks due to difficulty in pulling funds out of foreign countries in a
short time period.
Japanese banks are exposed to interest rate risks due to uncontrollable rate changes outside the jurisdiction
of Japanese central bank.
Japanese banks are exposed to default risks due to lending to foreign borrowers.
Japanese banks are exposed to exchange rate risks due to mismatched assets and liabilities in different
currencies.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1aaff698-d6d9-432c-a8ab-5a03f6066bc1%2Fd33e55b3-2595-4fb9-be71-965aab24ec01%2Fj6vo7d_processed.png&w=3840&q=75)
Transcribed Image Text:Squeezed at home by razor-thin margins and negative interest rates, Japanese banks have more
than doubled borrowing and lending in dollars since 2017. Why is this practice risky?
Japanese banks are exposed to liquidity risks due to difficulty in pulling funds out of foreign countries in a
short time period.
Japanese banks are exposed to interest rate risks due to uncontrollable rate changes outside the jurisdiction
of Japanese central bank.
Japanese banks are exposed to default risks due to lending to foreign borrowers.
Japanese banks are exposed to exchange rate risks due to mismatched assets and liabilities in different
currencies.
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