Financial Market in Japan: Essay Example, 528 words GradesFixer

Haven't found the right essay?

Get an expert to write your essay!


Professional writers and researchers


Sources and citation are provided


3 hour delivery

This essay has been submitted by a student. This is not an example of the work written by professional essay writers.

Financial Market in Japan

Print Download now

Pssst… we can write an original essay just for you.

Any subject. Any type of essay.

We’ll even meet a 3-hour deadline.

Get your price

121 writers online

Download PDF

Japan is the latest global financial hub to start making inroads into Islamic finance, which that could help strengthen regional economic ties and give its lenders an edge in winning business in markets whose growth prospects far outpace their home turf. Tokyo has long been a major provider of financial assistance for developing countries and its banks are active across Asia and the Middle East, but until now Islamic finance has played a minor role. That could soon change amid a regulatory effort to facilitate development of the sector, and could even help Japan counter any loss of regional influence ahead of the launch of the China-led Asian Infrastructure Investment Bank.

Islamic finance, which follows religious principles such as bans on interest and monetary speculation, has boomed in the last few years on the back of strong economic growth in its core markets, the Gulf and Southeast Asia. The sector has grabbed the attention of global financial centres – Britain, Hong Kong and Luxembourg have all issued debut sovereign Islamic bonds over the past year – and the industry’s worldwide assets are estimated at more than $2 trillion.

In February, Japan’s financial regulator said it would study relaxing rules for domestic banks to use Islamic financial products, potentially opening the world’s second largest bond market to sukuk, or Islamic bonds. Over the past year, Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan’s largest lender, and Sumitomo Mitsui Banking have expanded their Islamic finance activities overseas. In September, BTMU became the first Japanese commercial bank that issue sukuk via its Malaysian unit. Even the Japan International Cooperation Agency is jumping on the action, assisting Jordan in its plans to issue debut sukuk, as demand for such funding tools grows among majority-Muslim countries.

Growth market in Japan

In 2008, Japan’s Financial Services Agency (FSA) amended rules to allow subsidiaries of Japanese banks to conduct Islamic finance transactions, with foreign subsidiaries later allowed to take Islamic deposits, but the rules are seen as restrictive. The regulator is considering allowing banks to provide Islamic products in the domestic market for the first time, and will present the results of a consultation on rule changes later this month.

Islamic products require multiple transfers of title of the underlying asset, and so can present regulatory challenges for new jurisdictions in areas such as tax. Japanese banks, as well as other corporates, want greater flexibility on the rules to help them grow their business overseas. Any FSA relaxation could help banks diversify away from a domestic market which saw 2.5 percent year-on-year loan growth in February, the bulk of that coming from Japanese regional lenders. That trails the 8.3 percent growth in financing posted by Indonesian Islamic banks in 2014, a modest figure compared with the 25.2 percent growth posted a year earlier.

Japanese banks are keen to grab a greater share of that business: Sumitomo Mitsui started offering Islamic finance via its Malaysian subsidiary last year. It has also partnered with the export credit insurance arm of the Islamic Development Bank to explore financing of infrastructure deals. Even the Asian Development Bank, where Japan is a key player, is ramping up efforts to encourage use of Islamic finance by its member countries.

Remember: This is just a sample from a fellow student.

Your time is important. Let us write you an essay from scratch

100% plagiarism free

Sources and citations are provided

Cite this Essay

To export a reference to this article please select a referencing style below:

GradesFixer. (2019, January, 03) Financial Market in Japan. Retrived July 17, 2019, from
"Financial Market in Japan." GradesFixer, 03 Jan. 2019, Accessed 17 July 2019.
GradesFixer. 2019. Financial Market in Japan., viewed 17 July 2019, <>
GradesFixer. Financial Market in Japan. [Internet]. January 2019. [Accessed July 17, 2019]. Available from:

Sorry, copying is not allowed on our website. If you’d like this or any other sample, we’ll happily email it to you.

By clicking “Send”, you agree to our Terms of service and Privacy statement. We will occasionally send you account related emails.



Your essay sample has been sent.

Want us to write one just for you? We can custom edit this essay into an original, 100% plagiarism free essay.

thanks-icon Order now

Hi there!

Are you interested in getting a customized paper?

Check it out!
Having trouble finding the perfect essay? We’ve got you covered. Hire a writer uses cookies. By continuing we’ll assume you board with our cookie policy.