Advanced Search
MyIDEAS: Login to save this paper or follow this series

Banks and Economic Growth: Implications from Japanese History

Contents:

Author Info

  • Miwa Yoshiro

    (Faculty of Economics, University of Tokyo)

  • J. Mark Ramseyer

    (Faculty of Law, Harvard University)

Abstract

In the 1950s and 60s, Alexander Gerschenkron claimed that banks facilitate economic growth among "backward" countries. In 1990s and 2000s, many theorists similarly claim that banks promote growth. Banks do so by their superior monitoring and screening capabilities, they reason. Through those capabilities, banks reduce informational asymmetries and the attendent moral hazard and adverse selection, and thereby improve the allocation of credit. As a fast-growth but allegedly bank-centered economy, Japan plays an important part in these discussions of finance and growth. In early 20th century Japan firms relied heavily on bank debt, observers argue. Those firms with preferential access to debt outperformed the others, and those that were part of the zaibatsu corporate groups obtained that preferential access through their affiliated banks. With data from the first half of the century, we ask whether Japanese banks performed the roles Gerschenkron and modern theorists assign them. Notwithstanding the usual accounts, we find that they did not. Japan was not a bank-centered economy; instead, firms relied overwhelmingly on equity finance. It was not an economy where firms with access to bank credit outperformed their rivals; instead, firms earned no advantage from such access. And it was not a world where the zaibatsu manipulated their banks to favor affiliated firms; instead, zaibatsu banks loaned affiliated firms little more (if any) than the deposits those firms had made with the banks. During the first half of the last century, Japanese firms obtained almost all their funds through decentralized, competitive capital markets.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2000/2000cf87.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-87.

as in new window
Length: 42 pages
Date of creation: Jul 2000
Date of revision:
Handle: RePEc:tky:fseres:2000cf87

Contact details of provider:
Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033
Phone: +81-3-5841-5644
Fax: +81-3-5841-8294
Email:
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC

Related research

Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bernard S. Black & Ronald J. Gilson, 1999. "Does Venture Capital Require An Active Stock Market?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(4), pages 36-48.
  2. John Cawley & Tomas Philipson, 1997. "An Empirical Examination of Information Barriers to Trade inInsurance," University of Chicago - George G. Stigler Center for Study of Economy and State 132, Chicago - Center for Study of Economy and State.
  3. Atje, Raymond & Jovanovic, Boyan, 1993. "Stock markets and development," European Economic Review, Elsevier, vol. 37(2-3), pages 632-640, April.
  4. Demirguc-Kunt, Ash & Maksimovic, Vojislav, 1996. "Stock Market Development and Financing Choices of Firms," World Bank Economic Review, World Bank Group, vol. 10(2), pages 341-69, May.
  5. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
  6. Kaplan, Steven N & Zingales, Luigi, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 169-215, February.
  7. Merton H. Miller, 2012. "Financial Markets and Economic Growth," Journal of Applied Corporate Finance, Morgan Stanley, vol. 24(1), pages 8-13, 03.
  8. Caroline Fohlin, 1998. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Journal of Finance, American Finance Association, vol. 53(5), pages 1737-1758, October.
  9. Pranab Bardhan and John E. Roemer., 1991. "Market Socialism: A Case for Rejuvenation," Economics Working Papers 91-175, University of California at Berkeley.
  10. Miwa, Yoshiro & Ramseyer, J Mark, 2000. "Corporate Governance in Transitional Economies: Lessons from the Prewar Japanese Cotton Textile Industry," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 171-203, January.
  11. Steven N. Kaplan & Luigi Zingales, 2000. "Investment-Cash Flow Sensitivities are not Valid Measures of Financing Constraints," NBER Working Papers 7659, National Bureau of Economic Research, Inc.
  12. Mayer, Colin, 1987. "New Issues in Corporate Finance," CEPR Discussion Papers 181, C.E.P.R. Discussion Papers.
  13. Charles W. Calomiris & Carlos D. Ramirez, 1996. "The Role Of Financial Relationships In The History Of American Corporate Finance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(2), pages 52-73.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Yoshiro Miwa & J. Mark Ramseyer, 2001. "The Myth of the Main Bank: Japan and Comparative Corporate Governance," CIRJE F-Series CIRJE-F-131, CIRJE, Faculty of Economics, University of Tokyo.
  2. Yoshiro Miwa & J. Mark Ramseyer, 2002. "The Fable of the Keiretsu," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(2), pages 169-224, 06.
  3. Miwa, Yoshiro & Ramseyer, J. Mark, 2006. "Japanese industrial finance at the close of the 19th century: Trade credit and financial intermediation," Explorations in Economic History, Elsevier, vol. 43(1), pages 94-118, January.
  4. Yasushi Hamao & Takeo Hoshi & Tetsuji Okazaki, 2007. "Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period," CIRJE F-Series CIRJE-F-495, CIRJE, Faculty of Economics, University of Tokyo.
  5. Peter L. Rousseau & Richard Sylla, 2001. "Financial Systems, Economic Growth, and Globalization," Vanderbilt University Department of Economics Working Papers 0119, Vanderbilt University Department of Economics.
  6. Yoshiro Miwa & J. Mark Ramseyer, 2004. "Industrial Finance Before the Financial Revolution: Japan at the Turn of the Last Century," CIRJE F-Series CIRJE-F-311, CIRJE, Faculty of Economics, University of Tokyo.
  7. Yoshiro Miwa, 2012. "How Strongly Do "Financing Constraints" Affect Firm Behavior?: Japanese Corporate Investment since the Mid-1980s," CARF F-Series CARF-F-291, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  8. Takashi Nanjo & Makoto Kasuya, 2009. "Part-Paid Stock, Corporate Finance, and Investment: Economic Consequences of the Part-Paid Stock System and Supplementary Installments in the Early 1930s of Japan," IMES Discussion Paper Series 09-E-22, Institute for Monetary and Economic Studies, Bank of Japan.
  9. Yoshiro Miwa & J. Mark Ramseyer, 2005. "The Good Occupation," CIRJE F-Series CIRJE-F-340, CIRJE, Faculty of Economics, University of Tokyo.
  10. Yoshiro Miwa, 2012. "How Strongly Do "Financing Constraints" Affect Firm Behavior?: Japanese Corporate Investment since the Mid-1980s," CIRJE F-Series CIRJE-F-862, CIRJE, Faculty of Economics, University of Tokyo.
  11. Yoshiro Miwa & J. Mark Ramseyer, 2000. ""The Fable of the Keiretsu: "Keiretsu" in Keiretsu no Kenkyu"(in Japanese)," CIRJE J-Series CIRJE-J-38, CIRJE, Faculty of Economics, University of Tokyo.
  12. Yoshiro Miwa & J. Mark Ramseyer, 2004. "Industrial Finance Before the Financial Revolution: Japan at the Turn of the Last Century (Subsequently published in "Explanations in Economic History", 2005, vol. 43, 94-118. )," CARF F-Series CARF-F-018, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  13. Yasushi Hamao & Takeo Hoshi & Tetsuji Okazaki, 2007. "Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period?(Published in Takatoshi Ito and Andrew Rose eds. "Financial Sector Development in the Pacific Rim". Chicago, ," CARF F-Series CARF-F-098, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  14. Yoshiro Miwa & J. Mark Ramseyer, 2001. "Property Rights and Indigenous Tradition Among Early 20th Century Japanese Firms," CIRJE F-Series CIRJE-F-104, CIRJE, Faculty of Economics, University of Tokyo.
  15. Julian FRANKS & Colin MAYER & MIYAJIMA Hideaki, 2009. "Equity Markets and Institutions: The case of Japan," Discussion papers 09039, Research Institute of Economy, Trade and Industry (RIETI).
  16. Yamada, Ken, 2004. "Fact or Fable? Misunderstanding or Misspecification? Keiretsu, the Main-Bank System, and the Japanese Economy," Journal of Asian Economics, Elsevier, vol. 15(5), pages 999-1004, October.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2000cf87. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.