Japan's Financial System: A Micro Approach

Abstract

1. Introduction: According to the point of view dominant thus far (i.e., the traditional paradigm), the Japanese financial system is an oddity that cannot be explained through the application of standard Western economic theory. Consequently, the Japanese financial system was often seen as a backward or "distorted" entity. Although there are some important exceptions,1 it can be said that this view has been common, shared by both Japanese Marxist and non-Marxist economists. However, two questions can be raised about this viewpoint: One might question first whether the standard economic theory actually explains the Western financial systems, and second, whether it is really appropriate to regard the Western financial systems as an absolute norm.