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Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period

In: Financial Sector Development in the Pacific Rim

Author

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  • Yasushi Hamao
  • Takeo Hoshi
  • Tetsuji Okazaki
Abstract
Recent studies have established that the Japanese stock market was quite large in the pre-war period, and played an important role in financing the economic development. The pre-war stock market in Japan, however, did not achieve its size and status quickly. Indeed, the market capitalization stayed relatively small during the early years of the stock market development in Japan. This paper studies the pre-war development of the Tokyo Stock Exchange, which eventually grew to be one of the two largest stock exchanges in the pre-war Japan, and examines why the development was rather stagnant since its establishment in 1878 to the 1910s and what led to its take-off in the late 1910s. The paper argues that the TSE stayed small because the low liquidity discouraged the new companies from listing their stocks. The lack of growth in new listed stocks meant the liquidity continued to be low until 1918, when the TSE changed its listing policy to start listing companies without waiting for their listing applications. The provides empirical evidence from listing behavior of cotton spinning firms that shows the size of the market indeed mattered for their listing decision before 1918.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Yasushi Hamao & Takeo Hoshi & Tetsuji Okazaki, 2009. "Listing Policy and Development of the Tokyo Stock Exchange in the Pre-War Period," NBER Chapters, in: Financial Sector Development in the Pacific Rim, pages 51-87, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:0422
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    References listed on IDEAS

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    Cited by:

    1. Hannah, Leslie & Kasuya, Makoto, 2015. "Twentieth century enterprise forms: Japan in comparative perspective," LSE Research Online Documents on Economics 64489, London School of Economics and Political Science, LSE Library.
    2. HANNAH, Leslie, 2018. "Corporate Governance, Accounting Transparency and Stock Exchange Sizes in Germany, Japan and “Anglo-Saxon” Economies, 1870-1950," Discussion paper series HIAS-E-77, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    3. Tetsuji Okazaki & Toshihiro Okubo & Eric Strobl, 2020. "The Bright and Dark Side of Financial Support from Local and Central Banks after a Natural Disaster: Evidence from the Great Kanto Earthquake, 1923 Japan," Keio-IES Discussion Paper Series 2020-001, Institute for Economics Studies, Keio University.
    4. Nakabayashi, Masaki, 2019. "Ownership structure and market efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 189-212.

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