Financial transition in pre-World War II Japan and Southeast Asia

Self-sustaining, technologically based growth has always been accompanied by a process of financial transition which, as defined by Raymond Goldsmith, entails an increase in the financial superstructure to a status in the economy comparable to that in the leading countries of North America and Western Europe. The pattern of development along this transitional path may, of course, differ, as for example in the relative contribution of bank- or market-based financial systems. But all countries, Goldsmith observed, trace a similar transitional path in the increase in their superstructure of financial instruments and institutions relative to an infrastructure of output and wealth. Because of the close relationship between financial transition and modern economic growth as defined by Simon Kuznets, differences in speed at which countries traverse Goldsmith's transitional path are critical.