IDEAS home Printed from https://ideas.repec.org/p/cnn/wpaper/25-007e.html

Wartime Financial Control and Allocation of Capital: The Case of Japan during World War II

Author

Listed:
  • Tetsuji OKAZAKI

Abstract

During World War II, the Japanese government implemented financial controls to reduce funds for nonessential and nonurgent industries, and thereby secured funds for the strategic industries. For this purpose, the government classified industries into classes, and regulated fund flows to Class C industries, regarded as nonessential and nonurgent. This paper identifies the impact of this regulation on capital allocation using firm-level panel data. The regulation lowered capital growth by around 6.5 percentage points, and that the total capital of the Class C industries in 1942 was around 30% lower than its counterfactual value assuming there had been no regulation.

Suggested Citation

  • Tetsuji OKAZAKI, 2025. "Wartime Financial Control and Allocation of Capital: The Case of Japan during World War II," CIGS Working Paper Series 25-007E, The Canon Institute for Global Studies.
    • Handle: RePEc:cnn:wpaper:25-007e
    as

    Download full text from publisher

    File URL: https://cigs.canon/en/uploads/2025/03/WP25-007E_250306_okazaki.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fetter, Daniel K., 2016. "The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership," The Journal of Economic History, Cambridge University Press, vol. 76(4), pages 1001-1043, December.
    2. Higgs, Robert, 1992. "Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s," The Journal of Economic History, Cambridge University Press, vol. 52(1), pages 41-60, March.
    3. Tetsuji Okazaki, 2023. "Designing wartime economic controls: Productivity and firm dynamics in the Japanese cotton spinning industry, 1937–9," Economic History Review, Economic History Society, vol. 76(4), pages 999-1022, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brunet, Gillian & Hilt, Eric & Jaremski, Matthew, 2025. "War bonds and household saving in WWII," Explorations in Economic History, Elsevier, vol. 97(C).
    2. Joan Monràs & José Garcia Montalvo, 2021. "The effect of second generation rent controls: New evidence from Catalonia," Economics Working Papers 1836, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2022.
    3. Ronan Lyons & Maximilian Guennewig-Moenert, 2024. "Judge for Yourself? The Impact of Controls on Rents in Interwar New York," Trinity Economics Papers tep0924, Trinity College Dublin, Department of Economics.
    4. Ryoji Koike, 2019. "Interpolation of Japan's Household Consumption during World War II," IMES Discussion Paper Series 19-E-07, Institute for Monetary and Economic Studies, Bank of Japan.
    5. Hugh Rockoff, 2016. "The U.S. Economy in WWII as a Model for Coping with Climate Change," NBER Working Papers 22590, National Bureau of Economic Research, Inc.
    6. Fetter, Daniel K., 2016. "The Home Front: Rent Control and the Rapid Wartime Increase in Home Ownership," The Journal of Economic History, Cambridge University Press, vol. 76(4), pages 1001-1043, December.
    7. Price V. Fishback & Andrew J. Seltzer, 2021. "The Rise of American Minimum Wages, 1912–1968," Journal of Economic Perspectives, American Economic Association, vol. 35(1), pages 73-96, Winter.
    8. Zdenka Johnson, 2022. "The Role of Federal Government in the United States War Economy during World War II [Role federální vlády ve válečné ekonomice Spojených států amerických během druhé světové války]," E-LOGOS, Prague University of Economics and Business, vol. 2022(2), pages 23-47.
    9. Gandhi, Sahil & Green, Richard K. & Patranabis, Shaonlee, 2022. "Insecure property rights and the housing market: Explaining India’s housing vacancy paradox," Journal of Urban Economics, Elsevier, vol. 131(C).
    10. Juan-Pierré BRUWER & André VAN DEN BERG, 2017. "The conduciveness of the South African economic environment and Small, Medium and Micro Enterprise sustainability: A literature review," Expert Journal of Business and Management, Sprint Investify, vol. 5(1), pages 1-12.
    11. Stephen FERRIS & Marcel-Cristian VOIA, 2022. "Do Rival Political Parties Enforce Government Efficiency? Evidence from Canada, 1867 - 2021," LEO Working Papers / DR LEO 2948, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    12. repec:jpe:journl:1046 is not listed on IDEAS
    13. Alexander J. Field, 2023. "The decline of US manufacturing productivity between 1941 and 1948," Economic History Review, Economic History Society, vol. 76(4), pages 1163-1190, November.
    14. Ferris, J. Stephen & Voia, Marcel-Cristian, 2023. "Do rival political parties enforce government efficiency? Evidence from Canada 1867–2021," European Journal of Political Economy, Elsevier, vol. 77(C).
    15. Harrison, Mark, 2011. "Capitalism at War," CAGE Online Working Paper Series 60, Competitive Advantage in the Global Economy (CAGE).
    16. Tetsuji Okazaki, 2022. "Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s," CARF F-Series CARF-F-537, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    17. Fenoaltea, Stefano, 2018. "Spleen: the failures of the cliometric school," MPRA Paper 90210, University Library of Munich, Germany.
    18. Konstantin A. Kholodilin & Sebastian Kohl, 2021. "Rent Price Control – Yet Another Great Equalizer of Economic Inequalities?: Evidence from a Century of Historical Data," Discussion Papers of DIW Berlin 1927, DIW Berlin, German Institute for Economic Research.
    19. Giampaolo Garzarelli & Lyndal Keeton & Aldo A. Sitoe, 2022. "Rights redistribution and COVID-19 lockdown policy," European Journal of Law and Economics, Springer, vol. 54(1), pages 5-36, August.
    20. Konstantin A. Kholodilin, 2025. "The Impact of Governmental Regulations on Housing Market: Findings of a Meta-Study of Empirical Literature," Discussion Papers of DIW Berlin 2113, DIW Berlin, German Institute for Economic Research.
    21. Stephen Malpezzi, 2021. "Housing “Affordability” and Responses During Times of Stress: A Brief Global Review," GRU Working Paper Series GRU_2021_011, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cnn:wpaper:25-007e. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The Canon Institute for Global Studies (email available below). General contact details of provider: https://edirc.repec.org/data/canonjp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.