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Institutions, Competition, and Capital Market Integration in Japan

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  • Mitchener, Kris James
  • Ohnuki, Mari

Abstract

Using a newly constructed panel data set, which includes annual estimates of lending rates for 47 Japanese prefectures, we analyze why interest rates converged over the period 1884–1925. We find evidence that technological innovations and institutional changes played an important role in creating a national capital market in Japan. In particular, the diffusion in the use of the telegraph, the growth in commercial branch banking networks, and the development of Bank of Japan's branches reduced interest rate differentials. Bank regulation appears to have played little role in impeding financial market integration.

Suggested Citation

  • Mitchener, Kris James & Ohnuki, Mari, 2009. "Institutions, Competition, and Capital Market Integration in Japan," The Journal of Economic History, Cambridge University Press, vol. 69(1), pages 138-171, March.
    • Handle: RePEc:cup:jechis:v:69:y:2009:i:01:p:138-171_00
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    Cited by:

    1. Jacks, David S. & Yan, Se & Zhao, Liuyan, 2017. "Silver points, silver flows, and the measure of Chinese financial integration," Journal of International Economics, Elsevier, vol. 108(C), pages 377-386.
    2. John P. Tang, 2011. "Technological leadership and late development: evidence from Meiji Japan, 1868–1912," Economic History Review, Economic History Society, vol. 64(s1), pages 99-116, February.
    3. Lin, Chen & Ma, Chicheng & Sun, Yuchen & Xu, Yuchen, 2021. "The telegraph and modern banking development, 1881–1936," Journal of Financial Economics, Elsevier, vol. 141(2), pages 730-749.
    4. Bazot, Guillaume, 2014. "Local liquidity constraints: What place for central bank regional policy? The French experience during the Belle Époque (1880–1913)," Explorations in Economic History, Elsevier, vol. 52(C), pages 44-62.
    5. Klovland, Jan Tore & Øksendal, Lars Fredrik, 2013. "The decentralised central bank: regional bank rate autonomy in Norway, 1850-1892," Discussion Paper Series in Economics 6/2013, Norwegian School of Economics, Department of Economics.
    6. Mikio Ito & Kiyotaka Maeda & Akihiko Noda, 2016. "Market Integration in the Prewar Japanese Rice Markets," Papers 1604.00148, arXiv.org, revised Sep 2017.
    7. Chilosi, David & Volckart, Oliver, 2009. "Money, states and empire: financial integration cycles and institutional change in Central Europe, 1400-1520," Economic History Working Papers 27884, London School of Economics and Political Science, Department of Economic History.
    8. Nicholas, Tom, 2011. "The origins of Japanese technological modernization," Explorations in Economic History, Elsevier, vol. 48(2), pages 272-291, April.
    9. Jihad Dagher, 2018. "Regulatory Cycles: Revisiting the Political Economy of Financial Crises," IMF Working Papers 2018/008, International Monetary Fund.
    10. M. Sami NABI & M. Osman SULIMAN, 2009. "Institutions, Banking Development, And Economic Growth," The Developing Economies, Institute of Developing Economies, vol. 47(4), pages 436-457, December.

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