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Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s

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  • Tetsuji OKAZAKI

Abstract

This paper explores how financial controls functioned to affect funds allocations in late 1930s Japan. For larger firms, subject to the financial controls, the difference in capital growth between firms in the nonpriority and priority industries expanded when the financial controls started, while differences in borrowing growth between them did not until the controls were later extended to cover both short- and long-term funds. For samples including small and medium-sized firms, I found that for a nonpriority industry, the capital growth of the firms subject to the controls (with capital over the upper limit of exemption for the controls) declined compared with the firms under the upper limit when the controls commenced. Conversely, for firms in a priority industry, this discontinuity across the upper capital limit is not observed. These results strongly suggest that the financial controls did indeed affect and alter the funds allocation. Key words: Economic control, financial control, war economy, fund allocation, Japan JEL classification numbers: G18, G21, G38, N25, P21

Suggested Citation

  • Tetsuji OKAZAKI, 2022. "Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s," CIGS Working Paper Series 22-005E, The Canon Institute for Global Studies.
    • Handle: RePEc:cnn:wpaper:22-005e
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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