QE recapitalises banks and allows them to lend more. But this only works if demand from firms (and consumers) is sufficient. Or if there was a latent demand that was unmet before QE.

The BoJ is not buying securities to recapitalize their banks. The BoJ wires CBDC directly to the other Japanese banks, who distribute it equally to producers & consumers and keep growing their economy, but at a Zero state, meaning no inflation or deflation. Interest rates are close to zero, if not zero (itself). So, the QE effects are brilliantly disguised and are showing up as being ineffective.

The simple answer would be longterm shortage of workforce. Japan is no longer interesting to invest in, furthermore Japanese companies seek for FDI opportunities. This keeps the liquidity outside of the country. Liquidity is one of the bases for QE.

Thanks all for the replies enriching the width and depth of answer. Japanese culture is to save than spend. With the aging population, the Japanese is even more conservative with their pension funds i.e. do not spend unnecessary. Worsening by the inconsistent signals from BOJ for a firm unconventional monetary policy, Japanese become ever conservative now. In addition, the commercial banks are holding back the liquidity as excessive reserves rather than releasing as loans, to avoid non performing loans as a matter of survival. All these band-wagon the ineffectiveness of QE in Japan.