ABSTRACT
This chapter discusses post-war economic development of Japan’s financial system and the current status of Japanese financial sector issues. Japan has one of the world’s most developed and largest financial systems. It served the needs of Japan’s economy during the high-growth period of the 1960s and 1970s very well, but has struggled to adapt fully to the era of slow growth following the bursting of the financial bubble in 1989. Compared with other advanced economies, the banking sector is still relatively large, with an excessive number of differentiated institutions. Start-up companies and small and medium-sized enterprises still find it difficult to obtain finance. Key challenges include the need to respond to innovative financial technology (“fintech”) and to encourage households to invest in riskier assets.
