What Kind of Companies Are Withdrawing?

The Case of theJapanese Online Securities Industry

Abstract

A survey of 70 companies that had entered Japan’s online securities industry in its early stages showed that the number of these companies had shrunk dramatically to 56 companies by September 2003, following a series of market withdrawals that began in 2001. At first glance, this may appear to be a weeding out through a severe competition for survival. However, the reason for these withdrawals was not distress; in actuality troubles for these companies grew after they withdrew from the market. It is true that four out of the six (67%) foreign firms ceased operations and withdrew, but, in contrast, none of the 22 domestic financial firms halted operations, however, their numbers shrunk by nine (41%) due to mergers. In other words, at the very least Japan’s online securities industry in its early stages did not experience a culling due to distress as is implicitly assumed, but rather numbers were reduced due to other mechanisms such as financial restructuring in a very short period of time before the companies experienced distress.