Hiroshi Okuda, chairman of the Japan Federation of Employers' Association, called for political stability on Wednesday to help shore up the ailing stock market.
Okuda, chairman of Toyota Motor Corp., said Japanese stock prices tend to fall when the U.S. Nasdaq composite index falls but fail to rise when it moves up.
If the current stock price slump continues, Japanese banks may be forced to post losses and suspend dividend payments, he said.
The ongoing political instability here is partly responsible for the falling prices, he said.
The benchmark 225-issue Nikkei stock average hit a 16-year low Tuesday and only rebounded slightly Wednesday.
Okuda also called for the smooth implementation of the remaining supplementary budget for the current fiscal year and for the fiscal 2001 budget.