Twenty years after the financial system crisis that saw the collapse of major institutions such as Yamaichi Securities and Hokkaido Takushoku Bank, the nation's big banking groups are moving to substantially reduce their workforce and domestic outlets in response to the changing business environment. The massive nonperforming loan woes that disrupted the banking sector in the 1990s have been mostly resolved after an injection of taxpayer money and a temporary nationalization of some banks. Major banks have been consolidated into three megabank groups, and the financial system seems to be much more stable. But the streamlining efforts by the big banks reflect their sense of crisis over the industry's future. They should consider whether streamlining alone is enough to survive the tightening industry climate.

The failures of Yamaichi, one of the nation's top four brokerage firms, and Hokkaido Takushoku, one of the "city" major banks, in November 1997 symbolized the financial industry mess under the weight of bad assets in the wake of the collapse of the asset-inflated bubble boom in the early 1990s. The government responded to the growing uncertainties over the financial system by injecting a massive amount of taxpayer money into the troubled banks and placing some of them under temporary state control.

Today, the financial crisis of 1997 may look like a thing of the past. Since 2012, Japan's economy has experienced what is assessed as the second-longest boom cycle in postwar history. As major companies report record profits on the strength of brisk overseas demand and the weak yen, the Nikkei average on the Tokyo Stock Exchange soared to another 26-year high this week, although concern simmers over the brewing of yet another real estate market bubble.