Inter-Sectoral Flow of Funds in Japan since 1871: Credit Aggregates, Net Financial Assets, and Financial Surplus or Deficit since the Early Meiji Period

The Flow of Funds Accounts (FFA) statistics are useful for understanding macroeconomic trends in the flow of funds and the financial structure of Japan. The Bank of Japan has compiled and published the FFA in Japan each fiscal year since 1953. For earlier years, stock tables prepared by researchers are available for the early Meiji period since 1871. This paper presents several representative series of Japan's long- term FFA since the Meiji period, and explains the transitions of the historical data against the background of changes in the economic structure, and the historical connectivity of the data arising from the review of compilation methods. It also reviews historical FFA statistics and the process of making necessary revisions. The main results obtained are as follows. Firstly, fluctuations in financial assets and liabilities and financial surplus or deficit (as ratio to nominal GDP) by sector during and shortly after World War II were much larger than in other periods, and shrank significantly after the war, resulting in a considerable resetting of the credit-debt relationship. Secondly, the credit aggregates and the net financial assets in recent years in the private sector, as well as the credit aggregates and the net financial liabilities in the public sector, have exceeded their pre-World War II peaks. Thirdly, the private sector's financial surplus and the public sector's financial deficit were larger at the time of the fiscal reform of 1877 in the early Meiji period and after the outbreak of the Second Sino-Japanese War in 1937 than in recent years.