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Banks and Economic Growth: Implications from Japanese History

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  • Miwa, Yoshiro
  • Ramseyer, J Mark

Abstract

Alexander Gerschenkron argued that banks facilitate growth in "backward" countries, and modern theorists sometimes similarly claim that banks can promote growth by reducing informational asymmetries and improving the allocation of funds. Japan has played a part in these debates. In early twentieth-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 access through their affiliated banks. In fact, Japanese banks did not play the role attributed to them. Japan was not a bank-centered economy; instead, firms relied on equity finance. It was not an economy where firms with access to banks outperformed their rivals; instead, such firms earned no advantage. And it was not a world in which the zaibatsu manipulated their banks to favor affiliated firms; instead, zaibatsu banks loaned affiliated firms little more 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. Copyright 2002 by the University of Chicago.

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  • Miwa, Yoshiro & Ramseyer, J Mark, 2002. "Banks and Economic Growth: Implications from Japanese History," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 127-164, April.
  • Handle: RePEc:ucp:jlawec:v:45:y:2002:i:1:p:127-64
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    Cited by:

    1. Nadia Vanteeva & Charles Hickson, 2016. "The Effect of State-Private Co-partnership System on Russian Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(3), pages 333-356, May.
    2. Miwa, Yoshiro & Ramseyer, J. Mark, 2006. "The Fable of the Keiretsu," University of Chicago Press Economics Books, University of Chicago Press, edition 0, number 9780226532707.
    3. Peter L. Rousseau & Richard Sylla, 2003. "Financial Systems, Economic Growth, and Globalization," NBER Chapters,in: Globalization in Historical Perspective, pages 373-416 National Bureau of Economic Research, Inc.
    4. 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.
    5. 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.
    6. Yasushi Hamao & Takeo Hoshi & Tetsuji Okazaki, 2009. "Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period," NBER Chapters,in: Financial Sector Development in the Pacific Rim, East Asia Seminar on Economics, Volume 18, pages 51-87 National Bureau of Economic Research, Inc.
    7. 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.
    8. 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.
    9. 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.
    10. 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).
    11. 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.
    12. 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.
    13. Yoshiro Miwa, 2013. "How Strongly Do "Financing Constraints" Affect Firm Behavior? Japanese Corporate Investment since the Mid-1980s," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, pages 203-255.
    14. 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.
    15. Yoshiro Miwa & J. Mark Ramseyer, 2005. "The Good Occupation," CIRJE F-Series CIRJE-F-340, CIRJE, Faculty of Economics, University of Tokyo.
    16. 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.
    17. 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.

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