Journal article

The Samurai Bond: Credit Supply, Market Access, and Structural Transformation in Pre-War Japan

S Basco, JP Tang

The Journal of Economic History | Cambridge University Press (CUP) | Published : 2020


While credit supply growth is associated with exacerbating financial crises, its impact on long-run growth is unclear. Market access similarly has ambiguous economic effects over time. Using regional variation in bond payments to samurai and the introduction of railways in nineteenth century Japan, we find that together they are associated with persistent redistributive effects between regions and sectors. Areas with higher bond value and railway access experienced tertiary sector growth and primary sector shrinkage, with analogous results in sectoral labor shares. This interaction between credit supply and market access facilitated structural transformation but had little long-run net growt..

View full abstract

University of Melbourne Researchers


Awarded by Australian Research Council

Funding Acknowledgements

Professor Tang acknowledges financial support from the Australian Research Council (DE120101426). We received useful feedback from Dan Bogart, Yannick Dupraz, James Fenske, Richard Grossman, Tim Guinnane, Walker Hanlon, Chiaki Moriguchi, Stephanie Schmitt-Grohe, Masato Shizume, Richard Sylla, Zach Ward, David Weinstein, Eugene White, participants from the EHA, AFSE, and NBER Japan Project meetings and from seminars at Hitotsubashi University, Waseda University, UC Davis, UC Irvine, Warwick University, Universidad Carlos III de Madrid, Universitat de Barcelona, Yale University, and New York University, and three anonymous referees. We thank Kyoji Fukao for generously sharing some of the data used in this research and the comments from anonymous referees. Any errors are our own.