What if Japanese bank returns stay structurally below their cost of capital through normalization?
Even through normalization, Japanese banks' return on equity stays structurally below their cost of capital, and the chronic-low-profitability fragility the BoJ FSR repeatedly warns of leaves the system thinly buffered against any shock.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 3–10 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Even through normalization, Japanese banks' return on equity stays structurally below their cost of capital, and the chronic-low-profitability fragility the BoJ FSR repeatedly warns of leaves the system thinly buffered against any shock. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Recession signal ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.