Cross Shareholdings in Japan: A New Unified Perspective of the Economic System

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`Stable holdings of each other's shares have been a significant, distinctive feature of Japanese major industrial companies and financial institutions and an integral component of its economic system of bank-based finance and permanent employment. Recent accelerating decline in stable shareholding thus has important implications for Japan's transition to a market-based system.

Mitsuaki Okabe provides useful data and insightful analysis of the rather complex patterns of changing costs and benefits of cross-shareholdings in this important new study, the first of its kind available in English.' - Hugh T. Patrick, Columbia University `Cross shareholding among major firms and the bank in Japan has long been a central feature of Japanese industrial organisation.

As Okabe argues it is not an isolated element in the way in which the Japanese economic system works: it is at the core of the whole system - the structure of the labour market, the way in which the capital market has worked to protect Japanese business against external competition, and the innovation system.

Okabe provides a fresh look at the dissolution of corporate and main bank links in Japan leaving open the question of when the changes under way will reach a critical point. This is a valuable up-to-date primer on these important changes in corporate Japan and the Japanese economic system more generally.' - Peter Drysdale, Australian National University, Australia This book focuses on one of the most important features of the contemporary Japanese economy; cross shareholding - or mutual shareholding - between corporations.

The book analyzes recent trends and the reasons behind these, and discusses the implications for the entire Japanese economic system and highlights relevant public policy. Mitsuaki Okabe proposes that the dissolution of cross shareholdings has weakened the importance of long-term transactional relationships as seen in the Keiretsu (the `main bank') practice and employment, and that as a result the character of the economy is now closer to that of the Anglo-American system.

Cross Shareholdings in Japan is a timely book and will be of special interest to academics and researchers of economics, Asian studies and finance, as well as policymakers and those involved either directly or indirectly in the Japanese financial system.