Japanese Banking Reform and the Occupation Legacy: Decompartmentalization, Deregulation, and Decentralization
J. Robert Brown Jr.
University of Denver Sturm College of Law
June 21, 2010
Denver Journal of International Law and Policy, Vol. 21, No. 361, 1993
One of the explanations for the economic success of Japan in the post-War era was its compartmentalized banking system. City banks, with deposit raising authority, made short term loans to Japanese businesses. Long term banks, with debenture issuing authority, provided long term funding. Trust banks were responsible for asset management. The separation of banking and securities functions left to securities firms the market for primary offerings.
The manicured system facilitated government control of the financial system and allowed the government to direct capital to the businesses most likely to lead the economic recovery. In some ways, the approach reflected a continuation of the pre-War finanical system. At the same time, however, the US excrecised considerable influence over its evolution during the Occupation of Japan, something that only ended in 1952. This article examines the historical evolution of the Japanese financial system, from the pre-War period through the immediate aftermath of the Occupation.
Accepted Paper Series
Date posted: June 22, 2010
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