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Branch Banking and Regional Financial Markets: Evidence from Prewar Japan

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Listed:
  • Mathias Hoffmann

    (Department of Economics, University of Zurich)

  • Tetsuji Okazaki

    (Faculty of Economics, The University of Tokyo)

  • Toshihiro Okubo

    (Faculty of Economics, Keio University)

Abstract

The banking sector in Japan experienced a substantial organizational change in the early twentieth century, including an expansion of branch networks. In this paper, we explore the implications of branch banking in regional economies, using unique bank branch office-level data for four rural regions: Fukushima, Tottori, Kumamoto, and Miyazaki Prefectures. We find that branch banking had a positive scale effect on lending. However, compared with branch offices of banks headquartered in the same municipality, branch offices of banks headquartered in other municipalities, especially in other prefectures, tended to have a lower propensity to issue loans. In particular, branch offices of banks headquartered in urban areas, such as Osaka and Tokyo, tended to collect deposits rather than to lend money through their branch networks, which restricted regional finance.

Suggested Citation

  • Mathias Hoffmann & Tetsuji Okazaki & Toshihiro Okubo, 2019. "Branch Banking and Regional Financial Markets: Evidence from Prewar Japan," CIRJE F-Series CIRJE-F-1109, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2019cf1109
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • N2 - Economic History - - Financial Markets and Institutions
    • N9 - Economic History - - Regional and Urban History

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