The transformation of zaibatsu to postwar corporate groups-from hierarchically integrated groups to horizontally integrated groups

The purpose of this article is to clarify how and why the zaibatsu in prewar Japan were transformed into corporate groups in postwar Japan, and to show what functions the corporate groups played in the initial phase of the transformation period (1949-mid-1950s), by focusing on three large zaibatsu organizations. This paper first briefly sketches the impact of dissolution on the corporate structure of former zaibatsu-line companies. Next, it investigates the forming of keiretsu financing and its functions by considering the accumulation of information concerning borrowers. It then explains the process of forming cross-shareholding in terms of two factors: firms′ attempts to keep autonomous management and to facilitate the increase of paid-in capital on the one hand, and banks′ attempts to monitor them on the other. Finally, this paper provides perspectives on corporate groups′ activities during the high-growth era. J. Japan. Int. Econ., September 1994, 8(3), pp. 293-328. School of Commerce, Waseda University, 6-1 Nishi-waseda 1-Chome, Shinjuku-ku, Tokyo, Japan.