A Study of Japanese Main Bank system

Abstract

After the end of World War II, Japanese economy continued to grow phenomenally for a long period of time. This is largely due to a system, called the main bank system, under which business corporations and their main banks are closely and effectively connected. While the system works well, everything goes well. However, when the bubble economy of the 1880s burst, the Japanese economy plunged into a slump which lasted for some ten years – a period usually called “a lost decade.” The system stopped working properly. This malfunction reflects an inadequate monitoring of corporate management and an insufficient risk control of financing.This essay attempts to define the main bank system in a new and broad perspective and consider the relationships between business corporations and their main banks.