Efficiencies of Agricultural Credit Associations of the US Farm Credit System are measured quarterly from 2005 through 2020. A slacks-based measure based on the directional distance function is used with non-performing loans included as an undesirable output. This permitted efficiency scores to be measured by type of defined input or output. Generally, most Associations were highly efficient, but there was deterioration in mean efficiency over the years 2008–2018, a period of financial difficulties in the US agriculture. Efficiencies of Associations that merged or consolidated were tracked before and after these activities. Mergers and consolidations often led to increased efficiencies.

China faces a number of important financial-stability risks. A persistent feature of the Chinese banking sector is the rapid formation of non-performing loans (NPLs) during each business cycle. Moreover, lending restrictions and interest-rate caps (“financial repression”) have, in part, given rise to an ever-expanding shadow-banking sector. The article highlights five cardinal sins within the Chinese financial system: (1) bad lending practices by the regulated sector, (2) lax governance, (3) a shadow-banking system that is dominated by short-term claims with no liquidity backstop, (4) stark lack of transparency in the shadow sector, and (5) very high levels of interconnectedness between the shadow and the regulated sector. The article suggests that some of these problems will be alleviated through a regulatory big bang that would abolish the current silo approach to financial regulation streamlining financial stability and conduct/consumer-protection supervision. Furthermore, we recommend the introduction of a binding and all-encompassing leverage ratio that will require banks to hold much higher capital buffers as a means to boost bank resilience, reduce NPLs, and battle interconnectedness with the shadow sector.

South Korea and Japan responded to their financial crisis of the late 1990s by restructuring financial institutions. Also, financial authorities were created to supervise financial institutions and lead financial restructuring. Financial restructuring focused on the resolution of non-performing loans that had been contributing to financial failures and on strengthening their equity capital bases for sound management. Huge amounts of public funds were mobilized to pursue these policy goals. The Korean government took more drastic measures by closing or merging many failing financial institutions. Financial restructuring also facilitated bank concentration in Korea — and Japan — giving births to several mega banks. Both governments of Korea and Japan encouraged bank concentration by allowing the establishment of a financial holding company. The Korean government was more actively involved in merging banks while Japanese bank mergers were taken by business initiatives.

Financial restructuring is expected to bring more market oriented business practices among financial institutions and loosen cooperative ties among financial institutions, corporations, and financial bureaucracy in both countries. Close bank-corporation ties through main bank system and corporate networks within a business group are being loosened in Japan particularly since concerned parties have come to seek market rationality over loyalty. On the other hand, the intervention in financial sector and the mediation in bank-corporation relationship by financial bureaucracy are expected to be weakened in the case of Korea. Nevertheless, discretionary power of Korea's financial bureaucracy appears stronger for the time being since it took the helmsman of determining which financial institution is out of market.