Market-based financing for small corporations during early industrialisation: The case of salt corporations in Japan, 1880s–1910s

Abstract

This study investigates how small corporations in rural areas of Japan obtained funding from the 1880 s through the 1910s and reassesses the role of market-based financing for Japanese small and medium-sized enterprises (SMEs). While most previous literature shows that Japan effectively used bank-based financing for SMEs, this study provides evidence that corporations of various sizes, including small ones in rural areas, arranged funding through the stock and bond markets during Japan’s early industrialisation period. While this type of financing arrangement helped promote early industrialisation, it also strengthened the dual economy during full-fledged industrialisation.

Keywords:

• Market-based financing
• industrialisation
• conventional industry
• small and medium-sized enterprises (SMEs)
• indigenous corporations
• small asset holders
• salt monopoly system
• stock market
• over-the-counter market
• salt industry
• dual economy
• Japan

Disclosure statement

I have no conflicts of interest to declare in relation to this study.

Notes

1 We cannot estimate the volume of salt consumption, including imported salt, for years before 1896 because the Japanese government began recording salt import statistics only in 1896.

2 There are no time-series price data of the shares of salt corporations because the shares of Utazu Enden and Utazu Seien were not listed on the stock exchanges.

3 The historical record of taxpayers who paid less than 10 yen each does not exist, and thus, we cannot observe them.

Additional information

Notes on contributors

Kiyotaka Maeda

Kiyotaka Maeda is an associate professor of modern Japanese history at the Department of Japanese History, Faculty of Letters, Keio University, Japan. He holds a Ph.D. in Economics from Keio University and has published articles in such journals as Economic History Review and Financial History Review. He was awarded the prize for the best paper by the Business History Society of Japan in 2013.