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Institutions, Competition, and Capital Market Integration in Japan

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  • Kris James Mitchener

    (Assistant Department of Economics, Santa Clara University (E-mail:kmitchener@scu.edu))

  • Mari Ohnuki

    (Institute for Monetary and Economic Studies, Bank of Japan (E-mail: mari.oonuki@boj.or.jp))

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    Abstract

    Using a newly-constructed panel data set which includes annual estimates of lending rates for 47 Japanese prefectures, we analyze why interest rates converged over the period 1884-1925. We find evidence that technological innovations and institutional changes played an important role in creating a national capital market in Japan. In particular, the diffusion in the use of the telegraph, the growth in commercial branch banking networks, and the development of Bank of Japanfs branches reduced interest-rate differentials. Bank regulation appears to have played little role in impeding financial market integration.

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    Bibliographic Info

    Paper provided by Institute for Monetary and Economic Studies, Bank of Japan in its series IMES Discussion Paper Series with number 08-E-12.

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    Date of creation: Jul 2008
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    Handle: RePEc:ime:imedps:08-e-12

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    Keywords: Monetary Policy; Input-Output Matrix; Durables; Non-durables;

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    References

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    1. Rousseau, Peter L., 1999. "Finance, investment, and growth in Meiji-era Japan," Japan and the World Economy, Elsevier, Elsevier, vol. 11(2), pages 185-198, April.
    2. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 208-225, March.
    3. George J. Stigler & Robert A. Sherwin, 1983. "The Extent of the Market," University of Chicago - George G. Stigler Center for Study of Economy and State, Chicago - Center for Study of Economy and State 31, Chicago - Center for Study of Economy and State.
    4. Eichengreen, Barry, 1984. "Mortgage Interest Rates in the Populist Era," American Economic Review, American Economic Association, American Economic Association, vol. 74(5), pages 995-1015, December.
    5. Kris James Mitchener & nd Mari Ohnuki, 2007. "Capital Market Integration In Japan," IMES Discussion Paper Series, Institute for Monetary and Economic Studies, Bank of Japan 07-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
    6. Michael D. Bordo & Barry Eichengreen & Douglas A. Irwin, 1999. "Is Globalization Today Really Different than Globalization a Hunderd Years Ago?," NBER Working Papers 7195, National Bureau of Economic Research, Inc.
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    11. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, Elsevier, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
    12. Rockoff, Hugh, 1977. "Regional interest rates and bank failures, 1870-1914," Explorations in Economic History, Elsevier, Elsevier, vol. 14(1), pages 90-95, January.
    13. James, John A., 1976. "The Development of the National Money Market, 1893-1911," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 36(04), pages 878-897, December.
    14. Mark Carlson & Kris James Mitchener, 2009. "Branch Banking as a Device for Discipline: Competition and Bank Survivorship during the Great Depression," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 117(2), pages 165-210, 04.
    15. Lewis, Kenneth A. & Yamamura, Kozo, 1971. "Industrialization and interregional interest rate structure the Japanese case: 1889-1925," Explorations in Economic History, Elsevier, Elsevier, vol. 8(4), pages 473-499.
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    17. Tetsuji Okazaki & Michiru Sawada, 2006. "Effects of a bank consolidation promotion policy: Evaluating Bank Law in 1927 Japan," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-400, CIRJE, Faculty of Economics, University of Tokyo.
    18. Kris James Mitchener & Mari Ohnuki, 2007. "Capital Market Integration in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, Institute for Monetary and Economic Studies, Bank of Japan, vol. 25(2), pages 129-154, November.
    19. Good, David F., 1977. "Financial Integration in Late Nineteenth-Century Austria," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 37(04), pages 890-910, December.
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