Japanese Finance
A history of nationalization, privatization, and regulation of Japanese finance.
See also the history of monetary policy.
Contents
History
Japan has a long history of vertically-integrated corporate groups built around banks. These structures ensure a source for credit internally, while also restricting its availability externally. Zaibatsu (財閥) and keiretsu (系列) are both emblematic of this.
MOF and MITI were active economic interventionists. Because of the general unavailability of credit, these ministries were often the only way to get capital invested into a startup. The bureaucratic and regulatory processes were dominated by an 'iron triangle' between the LDP, the MOF, and keiretsu.
From the 1970s, Japan has continuously suffered from stagflation; expansionary monetary policies without significant market growth. The collapse of a real estate and stock bubble led to widespread insolvency of major banks. Rather than letting them fail, the government propped them up as zombie banks.
Personal credit is not widely available (largely due to the extremely low interest rate). As a result, the housing market is highly exclusive. Most mortgages feature longer terms than are conventionally seen, up to and including the 100-year mortgages of the 1980s.
The personal (household) savings rate also rose in the 1970s, and has never meaningfully returned to older levels. There are two likely explanations for this:
- The aforementioned unavailability of personal credit.
In Japan, families are expected to bear the fiscal burden of both their children and their elderly. Multi-generational households are commonplace. As the Japanese population continues to shrink and age, the expected private costs for welfare are also rising, so households are spreading the burden by saving in the short-term.