A MICRO-THEORETIC ANALYSIS OF JAPANESE FINANCIAL SYSTEM

Abstract

In Japan, the conventional and predominant opinion (the traditional paradigm) has long held that the standard economic theories developed in Anglo-American countries are inadequate to give convincing explanation of the Japanese financial system which has too much uniqueness. Also, this majority view has given way to the common attitude to understand the Japanese financial system as something that is backward or distorted. With some noteworthy exceptions,1) this attitude is shared by both of mainstream as well as Marxist economists of this country. However, we could challenge this majority view with two issues as follows : firstly, we can question whether the standard economic theories give in fact a satisfactory account of the reality of financial system in Anglo-American countries, and secondly, we can question if the Anglo-American financial system should really be considered as the absolute norm. In this paper, we will investigate the possibility of a new counter-paradigm in relation to the set of two questions mentioned in the above. In doing so, we will first effectuate a shift in the angle of analytical vision through summarizing the seminal results of new information economics (i.e., applied micro-economics) with regard to the theory of finance. Then, we will attempt to demonstrate the validity of typological analysis of financial system which tries to understand various systems in different countries in different times as entities each of which is endowed with an internal coherence, as opposed to the traditional, monistic analysis which uses Anglo-American countries as the sole ideal model. The paper ends with a few concluding remarks.