ABSTRACT
Corporate financing in Japan is distinguished from that in other developed countries by a high ratio of borrowing from the banking system. With the growth of private corporate sectors the role of securities markets as intermediary between the investor and the entrepreneur is considered preeminently important. In the financial markets, basically there are two types of financing, viz., equity and debt. Within a general framework, the significance of a stock market stems from its perceived classical role of allocating funds to the most productive sectors of the economy. The turnover/Gross Domestic Product ratio of listed securities is also very low representing only a fraction of 1 percent although it has shown an increasing trend. This may, perhaps, be due to various incentives for encouraging equity investment and financial market liberalization policy declared by government together with lowering down the interest rates and withdrawal of tax benefits from different debt securities.
