According to the Bank of Japan's (BOJ) annual report, Japanese financial institutions have sufficient capital buffers to withstand potential losses resulting from external factors. While Japanese financial institutions have limited direct exposure to Silicon Valley Bank (SVB), concerns about contagion from the collapse of SVB and Signature Bank have caused shares of financial stocks to decline, including those in Japan. The report also highlighted challenges that many Japanese regional banks face in terms of risk management, including analysing the impacts of heightened market volatility on their portfolios. Some regional financial institutions were found to have insufficiently assessed how declining interest payments could affect their future earnings. Additionally, the report noted that many regional financial institutions had issues with conducting effective risk management.