The development of financial institutions specializing in small businesses in Osaka in the interwar period

Abstract

The purpose of this article is to examine why financial institutions for small businesses developed in the city of Osaka in the interwar period. In the period from the Showa financial crisis of 1927 to the great depression of 1929〜31, deposits and loans by ordinary banks decreased, but deposits and loans by savings banks, mujin [mutual financing] companies, and credit associations used by small businesses rapidly increased. The growth of these financial institutions was mainly supported by their characteristic ways of financing. Branches of Fudo Chokin Ginko [Fudo Savings Bank] and mujin companies made long-term and unsecured loans, although at rates of interest higher than those charged by ordinary banks. Credit associations made short-term loans without collateral, and discounted bills. Moreover, they provided funds for the wholesalers that played a principal role in the finances of small businesses. The diversity of users was also an important factor in the development of financial institutions specializing in small businesses. Even in the great depression, they were utilized not only by firms that needed funds to continue to trade, but also by businessmen who intended to expand, those who wanted to maintain accounts with ordinary banks, and those who sought more profitable ways of saving.