The Crisis found too many companies had borrowed recklessly without regard for business basics. Deals based on friendship foundered when they proved unprofitable. Problems hidden by secretive habits and inadequate accounting erupted. And industries that grew strong on government favors found that surviving without help is not easy. Now Korean banks are struggling to survive, and the weakest are being shut.
More lessons abound, but perhaps they all boil down to one.
Japan boasts some of the world's biggest banks, but the three with the highest share prices are small regional institutions. Back during the heady 1980s, most banks raced to see who could balloon their loan portfolios fastest. But when a Tokyo developer asked him for a big loan in 1989, his boss in rural Okayama ordered him to forget it. If you stuff yourself too greedily, you suffer indigestion. All Rights Reserved.