Financial intermediation and late development in Meiji Japan, 1868 to 1912

Abstract

Was nineteenth-century Japan an example of finance-led growth? Using a new panel data set of firms from the Meiji period (1868–1912), this article tests whether financial sector development influenced extensive firm activity across industries and locations. Results from a two-stage least squares first difference model suggest that financial intermediation is associated with additional net firm establishment, particularly in light manufacturing sectors like textiles. The overall effect is muted in the latter part of the period and among peripheral regions, which may underscore the respective roles of institutions and agglomeration economies in later stages of development.