1993 Reports

Japanese banking in the United States: From transient advantage to strategic failure

Beechler, Schon; Scher, Mark J.

Japanese banks instantly became major players in world financial markets when the 1985 Plaza Accord doubled the value of the yen. Access to cheap capital and long-term relationships with Japanese firms doing business abroad allowed them to undercut overseas rivals and achieve early success. However this quick-term overseas strategy lacked a defined long-term outlook. Based upon the author's interviews with 61 Japanese bankers, this paper examines the failure of Japanese banks to create and sustain competitive advantage. Their lack of "soft" resources, such as international experience, knowledge about local markets, and management expertise, have all contributed to their recent retreat.