Question of the Day: Why Does Japan Only Have a Teency-Weency Corporate Bond Market?

How would you respond to this question?

Bruce Aronson at Hitotsubashi-wrote apaper (see below) in 2011which providedsome of the answers to this question, including the fact that bank loan interest ratesare very cheap in Japan.

To add to that,I know from my own personal experience that most Japanese mid-size companies believe a myth that their bank loans are de factomedium/long-term debt, when in fact they are rolled-over (ornot) every year… in which case when they arenot, bank loans are not in fact that reallylow-cost becuase they do not lock in low rates for a long time when you most need the money. (When you most need the money, you cannot roll them over, and then the domino effect means you may go bankrkupt.)

Then again, I have heard thatwhen the TSE tried to promote a corporate bond market seveal years ago, a big problem was Nomura's bond index, which essentially required required all significant issuers'bonds to be traded through Nomura at high spreads. That doesn't exactly sound like Euromarket-type efficiency….

What other answers to this question to you know of?

search for A Reassessment of Japan'sBigBangFinancial Regulatory Reform – (search: Aronson big bang) 

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.


  1. Hi,

    the link to the document seems to be broken. Can you please double check?

    Thank you and best regards,


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