Japan

Financial system

The main elements of Japan's financial system are much the same as those of other major industrialized nations: a commercial banking system, which accepted deposits, extended loans to businesses, and dealt in foreign exchange; specialized government-owned financial institutions, which funded various sectors of the domestic economy; securitiescompanies, which provided brokerage services, underwrote corporate and government securities, and dealt in securities markets; capital markets, which offered the means to finance public and private debt and to sell residual corporate ownership; and money markets, which offered banks a source of liquidity and provided the Bank of Japan with a tool to implement monetary policy.

Japan's traditional banking system was segmented into clearly defined components in the late 1980s: commercial banks (thirteen major and sixty-four smaller regional banks), long-term credit banks (seven), trust banks (seven), mutual loan and savings banks (sixty-nine), and various specialized financial institutions. During the 1980s, a rapidly growing group of nonbank operations—such as consumer loan, credit card, leasing, and real estate organizations—began performing some of the traditional functions of banks, such as the issuing of loans.

In the early postwar financial system, city banks provided short-term loans to major domestic corporations while regional banks took deposits and extended loans to medium-sized and small businesses. Neither engaged much in international business. In the 1950s and 1960s, a specialized bank, the Bank of Tokyo, took care of most of the government's foreign-exchange needs and functioned as the nation's foreign-banking representative. Long-term credit banks were intended to complement rather than to compete with the commercial banks.

In 1990, the five largest banks in the world, measured by total assets, were Japanese banks. These banks opened branches abroad, acquired existing foreign banks, and became engaged in new activities

As of March 1989, the five largest city banks in Japan (in order of total fund volume) were Dai-Ichi Kangyo Bank, Sumitomo Bank, Fuji Bank, Mitsubishi Bank, and Sanwa Bank.

A group of government financial institutions paralleled the private banking sector.

These institutions derived their funding from deposits collected by the postal savings system and deposited with the Trust Fund Bureau. The postal savings system, through the 24,000 post offices, accepted funds in various forms, including savings, annuities, and insurance. 

Banking, insurance, real estate, transportation, retail, telecommunications and construction play a significant role in the economy. Japan has a large industrial capacity, and it contains some of the largest producers of motor vehicles, electronics, machine tools, steel, ships, chemicals, textiles and food products.

Japan has well built financial system.

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