Editing Economy of Japan (section)

== ''Keiretsu'' ==
{{Main|Keiretsu}}
A {{Nihongo|''[[keiretsu]]''|系列|extra='system' or 'series'}} is a set of companies with interlocking business relationships and shareholdings. A ''keiretsu'' unequivocally exists as an identical form of business structure to the [[Affiliate (commerce)|''affiliate'']], or an associate.{{Citation needed|date=February 2023}} It is a type of [[business group]]. The prototypical {{lang|ja-Latn|keiretsu}} appeared in Japan during the "[[Japanese post-war economic miracle|economic miracle]]" following World War II. Before Japan's surrender, Japanese industry was controlled by large family-controlled [[Vertical monopoly|vertical monopolies]] called {{lang|ja-Latn|[[zaibatsu]]}}. The [[Allies of World War II|Allies]] dismantled the {{lang|ja-Latn|zaibatsu}} in the late 1940s, but the companies formed from the dismantling of the {{lang|ja-Latn|zaibatsu}} were reintegrated. The dispersed corporations were re-interlinked through share purchases to form horizontally integrated alliances across many industries. Where possible, {{lang|ja-Latn|keiretsu}} companies would also supply one another, making the alliances vertically integrated as well. In this period, official government policy promoted the creation of robust trade corporations that could withstand pressures from intensified world trade competition.<ref>[https://www.nytimes.com/1954/07/17/archives/japan-again-plans-huge-corporations.html?sq=ogasawara&scp=46&st=p  "Japan Again Plans Huge Corporations"] {{Webarchive |url= https://web.archive.org/web/20180723034507/https://www.nytimes.com/1954/07/17/archives/japan-again-plans-huge-corporations.html?sq=ogasawara&scp=46&st=p |date=23 July 2018}}. ''The New York Times''. 17 July 1954.</ref>

The major {{lang|ja-Latn|keiretsu}} were each centered on one bank, which lent money to the {{lang|ja-Latn|keiretsu}}'s member companies and held equity positions in the companies. Each central bank had great control over the companies in the ''keiretsu'' and acted as a monitoring entity and as an emergency bail-out entity. One effect of this structure was to minimise the presence of [[hostile takeover]]s in Japan, because no entities could challenge the power of the banks.{{Citation needed|date=May 2021}}

There are two types of {{lang|ja-Latn|keiretsu}}: vertical and horizontal. Vertical ''keiretsu'' illustrates the organisation and relationships within a company (for example all factors of production of a certain product are connected), while a horizontal ''keiretsu'' shows relationships between entities and industries, normally centered on a bank and trading company. Both are complexly woven together and sustain each other.<ref>{{cite journal |last1=Tomeczek |first1=Artur |title=The evolution of Japanese keiretsu networks: A review and text network analysis of their perceptions in economics |journal=Japan and the World Economy |date=June 2022 |volume=62 |doi=10.1016/j.japwor.2022.101132 |s2cid=247298887 |url= https://www.sciencedirect.com/science/article/pii/S0922142522000184 |access-date=1 December 2023}}</ref>

The Japanese recession in the 1990s had profound effects on the {{lang|ja-Latn|keiretsu}}. Many of the largest banks were hit hard by bad loan portfolios and forced to merge or go out of business. This had the effect of blurring the lines between the ''keiretsu'': [[Sumitomo Bank]] and [[Mitsui]] Bank, for instance, became [[Sumitomo Mitsui Banking Corporation]] in 2001, while [[Sanwa Bank]] (the banker for the Hankyu-Toho Group) became part of Bank of Tokyo-Mitsubishi UFJ, now known as [[MUFG Bank]]. Additionally, many companies from outside the keiretsu system, such as [[Sony]], began outperforming their counterparts within the system.{{Citation needed|date=May 2021}}

Generally, these causes gave rise to a strong notion in the business community that the old {{lang|ja-Latn|keiretsu}} system was not an effective business model, and led to an overall loosening of {{lang|ja-Latn|keiretsu}} alliances. While the {{lang|ja-Latn|keiretsu}} still exist, they are not as centralised or integrated as they were before the 1990s. This, in turn, has led to a growing [[corporate acquisition]] industry in Japan, as companies are no longer able to be easily "bailed out" by their banks, as well as rising [[derivative litigation]] by more independent shareholders.{{Citation needed|date=May 2021}}