A Comparative Study on Regional Finance in Japan and Korea: Evidence from Three Questionnaires

In this paper, to analyze the similarities and differences between the regional finance of Japan and South Korea (hereinafter, “Korea”), we compared questionnaires to small to midsize companies located in Korea’s Daegu/Gyeongbuk region with questionnaires to small to midsize companies located in Japan’s Kansai and Tokai regions. From the results, we were able to confirm that regional finance systems in Japan and Korea are very similar. For example, in the US, there is an overwhelming amount of small to midsize companies with only one partner bank, however, in Japan and Korea, having multiple partner banks is the norm. Therefore, the practice of having multiple partner banks should not be considered as being unique to Japan, rather, it can be inferred that such a phenomenon is natural in certain social, economical, and legal systems. Contrastingly, we found various differences between Japan and Korea. For example, in response to the question on the assessment of financial institutions, Korea firms gave the most positive assessment for “provision of funds,” whereas Japanese firms gave the most positive assessment for “knowledge on your companies.” These differences can be understood as the causes of the discrepancy between Japan and Korea in the level of economic development