Are Japanese Households Financially Healthy, and If so, Why? A Group of Seven (G7) Comparison

The Japanese Economy, Vol. 39, No. 4, 2012

ISER Discussion Paper No. 859

19 Pages Posted: 3 Dec 2012  

Charles Yuji Horioka

Asian Growth Research Institute; National Bureau of Economic Research (NBER); Osaka University - Institute of Social and Economic Research (ISER)

Date Written: November 27, 2012

Abstract

In this paper, I conduct an international comparison of the financial health of households using data on household wealth and indebtedness for the Group of Seven (G7) countries and show that, even though household borrowings in Japan were the highest among the G7 countries, at least until 2000, household assets were also high in Japan, as a result of which household net worth and financial health in Japan were among the highest in the G7 countries. Turning to long-term trends in Japan over time, I find that Japan has shown a sharp increase over time in household borrowing, at least until 2000, and a sharp increase over time in both household assets and household net worth, at least until 1990. It is not clear whether the greater financial health of Japanese households is due more to culture or to government policies, institutions, and other non-cultural factors, but it appears that long-term trends over time in household assets, liabilities, and net worth in Japan can be explained much better by non-cultural factors than by culture.

Keywords: financial health, households, balance sheets, liabilities, consumer credit, consumer loans, consumer finance, personal finance, indebtedness, housing loans, mortgages, borrowing, assets, financial assets, housing assets, net worth, net wealth, saving, frugality, culture, religion, tradition

JEL Classification: D12, D14, D91, E21

Suggested Citation

Horioka, Charles Yuji, Are Japanese Households Financially Healthy, and If so, Why? A Group of Seven (G7) Comparison (November 27, 2012). The Japanese Economy, Vol. 39, No. 4, 2012; ISER Discussion Paper No. 859. Available at SSRN: https://ssrn.com/abstract=2182327 or http://dx.doi.org/10.2139/ssrn.2182327

Charles Yuji Horioka (Contact Author)

Asian Growth Research Institute ( email )

11-4, Ohtemachi, Kokurakita-ku
Kitakyushu, Fukuoka 803-0814
Japan

HOME PAGE: http://www.agi.or.jp

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Osaka University - Institute of Social and Economic Research (ISER) ( email )

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Ibaraki, Osaka 567-0047
Japan

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