Business Economics

, Volume 42, Issue 2, pp 58–68 | Cite as

New Dimensions of Financial Liberalization in Japan

Differences Between the Financial Structures of Japan and the United States are Likely to Persist
  • Masaharu Takenaka


This article contrasts the development of Japanese financial institutions over the past 50 years to that of the United States and compares the two countries' household savings behavior. Although reform and liberalization is driving the Japanese financial sector to become more open and more sophisticated, there are powerful reasons for the Japanese system and Japanese asset-holding behavior to remain divergent from that of the United States. One major factor is that income and wealth in Japan are distributed much more evenly than in the United States. Since wealthy households are more sophisticated and better able to accommodate risk, the concentration of wealth in the United States means that, compared to Japan, there are more high income/high wealth households that are willing to take on risk from equity and bond holdings. In Japan, in contrast, there is a much heavier reliance on bank deposits. Even though financial institutions in the two countries are becoming more similar, the persistent differences in income distribution are likely to lead to persistent differences in asset holding and the composition of capital markets in the two countries.


Japan financial Structure United+States 

JEL Classifications

G2, O53 


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Copyright information

© National Association for Business Economics 2007

Authors and Affiliations

  • Masaharu Takenaka
    • 1
  1. 1.Economic Research Group, Bank of Tokyo-MitsubishiWashingtonUSA

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