Securities Activities of Japanese Banks under the 1993 Japanese Financial System Reform

Yagyu, Masaki | January 1, 1994

What is unique to the Japanese banking system is high specialization. In Japan, the banking industry is divided into many segments, including short-term banking, long-term banking, trust banking, retail banking, wholesale banking, small business banking, and international trade banking. In addition, Japan has many types of banking organizations, such as regular banks (Futsa Ginkd), long-term credit banks (Chdki Shin’y6 Gink6)’, trust banks (Shintaku Gink6), a foreign exchange bank (Gaikoku Kawase Ginkd)2, and credit unions (Shin’y Kinko). Each type of the banking organizations has been expected to specialize in some of the segments. Standing upon these recent developments in Japan’s banking system, this article describes the Japan’s current specialization system, focusing on securities activities of Japanese banking organizations. In the concrete, this article describes what kinds of securities activities Japanese banking organizations may directly, or indirectly through their affiliates, engage in under Japanese laws, and to which restrictions under Japanese laws such securities activities are subjected. This article focuses on securities activities because under the above circumstances, securities activities recently have most significantly changed among all kinds of activities of banking organizations. In addition, compared with other activities, securities activities of banking organizations are getting more important for banking organizations, as companies are shifting their fund raising from loans to securities financing and securitization of assets is progressing.