That Japan's financial sector is in a state of crisis hardly seems newsworthy anymore. What is far more surprising is that even some of its neighbors don't seem to have drawn the proper lessons from Tokyo's woes-namely that such a crisis can be avoided only by prompt implementation of far-reaching reforms. That is particularly true in Taiwan, where the banking sector is in severe risk of falling into Japanese-style stagnation. The island's banking industry already exhibits symptoms similar te the Japanese malaise. At first sight, its problems are even worse-with official statistics putting the nonperforming-loans ratio at 7.8% as of the end of September 2001, compared with Japan's 7%. In both cases, the real figure is likely to be much higher. Some private-sector analysts put the ratio in Japan at nearer 30% and around 15%-20% in Taiwan.
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