Stricter Basel Accord leads to Japanese banks restricting loan growth.
The Basel Accord in 1988 made Japanese banks tighten their lending due to stricter capital requirements. International banks in Japan increased loan growth sensitivity to capitalization to meet the 8% BIS ratio. Some banks switched to a 4% MOF requirement, showing less impact on lending. Domestic banks, always under the 4% MOF rule, did not change lending sensitivity to capitalization.