Panos Mourdoukoutas, a resident of Plainview and an economics professor at the C.W. Post Campus of Long Island University in Brookville, co-authored a book entitled The Rise and Fall of Abacus Banking in Japan and China. Mourdoukoutas explains in his book that Japanese and Chinese bankers operate more like accountants than bankers do.

"If you visit a Japanese or Chinese bank today, everyone has an abacus, or ancient calculator, on their desks," said Mourdoukoutas. "They use the abacus to monitor the flow of money in and out of the bank - just like an accountant would. They spend so much time on the abacus that they have not learned to manage the risk inherent in banking."

That was not a problem until now. Competition among Japanese banks is increasing due to deregulation and the slowing economy. In China, government ownership of banks and interest rate controls, which had virtually eliminated credit risks, are being eliminated. With China's upcoming entrance into the World Trade Organization, reform of the banking system is becoming increasingly urgent. Bankers in both countries must learn to manage credit risk and to deal with transparency and full disclosure rules and regulations, according to Dr. Mourdoukoutas. The Western solution is to clean up balance sheets and cancel non-performing loans. The inherent problem these systems face, according to Mourdoukoutas, lies with the bankers themselves.

"Japan is already experiencing a banking crisis, partly because of these shortcomings," said Mourdoukoutas. "China doesn't have an open banking crisis yet, but it will experience one if Chinese bankers don't learn to deal with risk."

Mourdoukoutas co-authored this book with Yuko Arayama, an economics professor at Japan's Nagoya University. For more information about Dr. Mourdoukoutas' theory on revitalizing the Japanese and Chinese banking systems, contact him at 299-2321.