ABSTRACT
In seeking to establish a modern financial system after the Meiji Restoration of 1868, Japans financial authorities borrowed heavily but not indiscriminately from the West. The banking system was inspired by the United System (US) model, stock exchanges in Tokyo and Osaka drew on the United Kingdom (UK) model, and the central bank copied the Belgian model. The comprehensive Banking Law of 1927, promulgated in response to the crisis, included only a bare minimum of newly codified regulations. Nevertheless, it also worked to increase substantially the discretionary powers of the already powerful Ministry of Finance (MoF). Two important events coincided to put pressure for change on the Japanese financial system during the 1970s. One was the country's transition from a developing to a developed economy around the start of the decade. The other was the externally induced oil price hikes of 1973 and 1979, which accentuated the slowdown in growth that was already occurring.
