The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies

By Masahiko Aoki; Hugh Patrick | Go to book overview

5 The Role of Long-Term Credit Banks Within the Main Bank System

Frank Packer

The role of banks in financing Japan's post-war growth has been well documented. At the same time, there has been increasing recognition that special relationships between certain banks and their customers—the main bank system—may have lowered various costs associated with bank debt in Japan, and be partially responsible for the extraordinary reliance on bank debt for most of the post-war period.

One problem with the provision of long-term investment financing by commercial banks is that it can put at risk the uninterrupted provision of liquidity services to the population at large. Though economic models often abstract away from this problem with the assumption that banks providing liquidity services have the ability to diversify away the long-term risk of their outstanding loans, regulators have rarely been so sanguine. In general, the United States has depended on the existence of well-developed securities markets to supplement and, in many cases, replace the provision of long-term debt by commercial banks. In Japan, particularly the Japan of the high growth era, the answer has lain rather in the creation of special classes of banks whose principal sources of financing are other than individual deposits. This paper examines one such class of institution, the long-term credit banks.

The long-term credit banks differ from the other principal private suppliers of long-term loans in post-war Japan, the trust banks, in two major respects. One is that because they have access to fixed rate long-term financing, they have been able to make the provision of fixed rate long-term loans their principal business. Secondly, the long-term credit banks do not have an exclusive affiliation with any of the six major corporate groups which lie at the core of the main bank system in Japan. While the trust banks either lent to designated sectors or supplemented the loans of their group's city bank, and as a result have been traditionally weak in credit analysis, the long-term credit banks have built up substantial in-house

-142-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 651

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.