Abstract
Institutions, markets, and regulations make up the financial system of a country. The system facilitates various economic functions, the most notable and important of which is transferring funds from surplus to deficit units of the economy. In contemporary Japan every component of the financial system is undergoing restructuring—more precisely, a process of liberalization. The term financial deregulation may be more familiar to non-Japanese. However, liberalization means not merely doing away with some regulations but also changes in the structure of financial institutions and markets.
According to Gurley and Shaw (1960), if primary securities issued by ultimate borrowers to finance their deficits are acquired by ultimate lenders in the financial system, it is direct finance. If they are purchased by financial intermediaries that issue their own debt to cover the acquisition of primary securities, it is indirect or intermediation finance. Note that it is direct finance when some corporate bonds newly issued are subscribed and held in the portfolio of a financial institution such as a commercial bank.
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References
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© 1992 Springer Science+Business Media New York
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Royama, S. (1992). Financial Intermediation and Liberalization in Japan. In: Edwards, F.R., Patrick, H.T. (eds) Regulating International Financial Markets: Issues and Policies. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-3880-2_8
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DOI: https://doi.org/10.1007/978-94-011-3880-2_8
Publisher Name: Springer, Dordrecht
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