The main bank system as part of Japanese corporate governance

One of the differentiating features of classical models of corporate governance is the role of banks in fi nancing enterprises [Milhaupt, 2001]. Banks play an important part in corporate governance in countries embracing the continental-Japanese model, and especially in Japan1, and are less important in countries with the Anglo-American model. Several key features may be distinguished in the Japanese system of corporate governance, namely the main bank system in which banks supervise their customers–companies, the lack of an external control market, company boards dominated by employees focusing mainly on operational management, and the system of lifetime employment [Milhaupt, 2001]. Japanese banks play a major role in gathering savings, allocating capital, monitoring investment decisions taken by the management of companies functioning within the main bank system, and managing risk. The assessment of these relationships and their impact on the growth of business and economy is not clear, both in theory and practice. Japan did not join countries developing capitalist economies until the mid-nineteenth century (after a period of two hundred and fi fty years of isolation), and therefore began industrialization much later than such countries as the United Kingdom, the United States, or Germany. However, within half a century (during the Meiji era2), the Land of Cherry Blossoms managed to bridge the gap and become one of the most economically developed countries, which it has remained to this day. A number of factors have contributed to this success: the consistent policy of the government, the activity of entrepreneurs, tradition, and also banks. The