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Institutions, Competition, and Capital Market Integration in Japan

Published online by Cambridge University Press:  01 March 2009

Kris James Mitchener  and
Mari Ohnuki
Kris James Mitchener*
Affiliation:
Associate Professor, Department of Economics, Santa Clara University and NBER, 500 El Camino Real, Santa Clara, CA 95053. E-mail: [email protected].
Mari Ohnuki*
Affiliation:
Associate Director, History and Archive Section, Institute for Monetary and Economic Studies, Bank of Japan, Tokyo 103–8660, Japan. E-mail: [email protected].
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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.

Type
ARTICLES
Information
The Journal of Economic History , Volume 69 , Issue 1 , March 2009 , pp. 138 - 171
Copyright
Copyright © The Economic History Association 2009

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