ABSTRACT
Industrialization requires investment, which in turn requires finance. Investment projects of zaibatsu-affiliated firms were financed by loans extended by leading banks within each group. Kikan ginko is a term describing a bank serving only one or a few firms. It was captured and subordinated by the parent firm and has no management independence. The Japanese Archipelago sits where four massive moving plates meet on the earth's crust. This produces earthquakes as well as volcanoes and hot springs. Firms routinely settle their accounts using commercial bills. There are two types of inability to repay which are fundamentally different and require very different solutions. One is the liquidity problem in which one is temporarily out of cash and cannot repay now. The other is the solvency problem in which the borrower is unable to repay either now or later because there is no expected income or asset to be generated in the future.
