The evolution of a national banking market in pre-war Japan |
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Authors: | Richard S Grossman Masami Imai |
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Institution: | a Department of Economics, Wesleyan University, Middletown, CT 06459, USA b Institute for Quantitative Social Science, Harvard University, Cambridge, MA 02138, USA |
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Abstract: | This paper assesses banking market integration in Japan during the period 1889-1938 using annual data on loan rates and spreads between loan and deposit rates. Banks in prefectures further from the financial centers exhibited higher loan rates and greater spreads than banks closer to the center, however, distance effects diminished over time, suggesting that banking markets became increasingly integrated due to declines in transaction costs. Additionally, loan rates and spreads varied negatively with the intensity of local bank competition, consistent with the notion of market segmentation. We speculate that Japan’s anti-competitive banking regulation might have slowed the process of banking market integration. |
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Keywords: | Banking Bank competition Market integration Japan Economic history Financial markets and institutions Asia including Middle East |
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