Negative Interest Rate Policy of Banks in Japan: A Review

The negative interest rate policy (NIRP) that lowered the long-term rate below zero might have impacted positively in Asian economies like Japan. The main objective of this study was to anticipate the effects of NIRP in the Japanese economy where exponential growth is missing for the last few decades. This paper review literatures on the state of NIRP in Japanese banks that lost their profit margins in domestic markets but discovered a new prospect to generate profit after the NIRP was introduced in January 2016. Online libraries and Google scholar electronic databases were researched using free-text words and NIRP subject headings relevant to the topic. Most studies identified were exploratory and of varying methodological design. The inclusion studies found that the strategic decision of the central bank in Japan resulted in bank-explicit variables like capitalization; subsidizing structure; plan of action; financing cost presentation; and focused conditions seem to lessen banks' eagerness to loan in a negative loan fee setting. These challenges need to be addressed in a manner that will help realize Japan's economic potential. This study will help to instill interest among policymakers to think of financial disputes to effortlessly contribute towards the development of the country.