Were Banks Really at the Center of the Prewar Japanese Financial System?
For many years, the dominant view of the Japanese financial system before World War II has been that industrial bank-type banks were at the center, and research emphasizing the role played by capital markets has generally been in the minority. Recent years, however, have seen the publication of research highlighting the development of prewar stock markets, which has sparked a debate challenging the accepted theory. This paper contains a comprehensive reconsideration of the roles played by banks and stock markets from both a quantitative and a qualitative perspective. On the quantitative side, it examines the structure of assets and liabilities in the private nonfinancial sector and long-term data on fund-raising by major manufacturing and public-sector enterprises. It concludes that while the private nonfinancial sector was in general strongly dependent on bank borrowings, when the focus is narrowed to large enterprises there was a high degree of dependence on equity fund- raising. While diachronic trends can be seen in these characteristics, it is clear that they stem from differences in data coverage and not from any basic changes in systems. On the qualitative side, the paper compares the roles played by banks and stock markets in two areas: resource allocation functions (information production functions and risk-bearing functions) and corporate governance functions. While stock markets did play some role in corporate governance, the paper concludes that resource allocation functions were only exhibited within a narrow group of wealthy individuals. On the other hand, banks played a large role in resource allocation functions by supplying risk money, but the paper concludes that their corporate governance functions were insufficient.
Volume (Year): 25 (2007)
Issue (Month): 1 (March)
|Contact details of provider:|| Postal: 2-1-1 Nihonbashi, Hongoku-cho, Chuo-ku, Tokyo 103|
Web page: http://www.imes.boj.or.jp/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ime:imemes:v:25:y:2007:i:1:p:49-76. 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: (Kinken)
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.