Monetary and Economic Studies Vol.25, No.1 / March 2007

The Bank of Japan Network and Financial Market Integration: From the Establishment of the Bank of Japan to the Early 20th Century

Mari Ohnuki

One of the purposes cited for establishing the Bank of Japan (BOJ) was to "facilitate finance" by promoting the nationwide integration of the regional financial markets, which until that point had been divided and functioned independently.
Nonetheless, much remains unknown about Japanese financial transactions and the operations of the BOJ during the Meiji Period, and the role the BOJ played in the process of domestic financial market integration is still not sufficiently clear.
The purpose of this paper is to examine, using interest rate data and documentary evidence of financial transactions, the role played by the BOJ in the process of financial market integration in Meiji Period Japan.
The analysis finds that, from the perspective of reducing inter-regional interest rate differences, there was indeed significant progress toward financial market integration in the latter half of the 1890s. It also finds that the BOJ may have played a role in promoting financial market integration because the expansion of its networks (a correspondent network with private-sector banks and a branch office network) served to facilitate the movement of funds between regions through the funds transfer services it provided.

Keywords: Financial market integration; Payments network; Bank of Japan; Correspondent network funds transfers; Movement of funds

Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.

Copyright © 2007 Bank of Japan All Rights Reserved.

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