The Comparison of Major Financial Issues Japan vs. the United States: 1986-2015

Research Article

Austin J Bus Adm Manage. 2017; 1(1): 1004.

The Comparison of Major Financial Issues Japan vs. the United States: 1986-2015

Murafuji I*

Department of Business and Technology Management, Kyushu University Business School, Japan

*Corresponding author: Murafuji Isao, The Department of Business and Technology Management, Graduate School of Economics, Kyushu University, 6-19- 1, Hakozaki Higashi-ku, Fukuoka 812-8581, Japan

Received: May 02, 2017; Accepted: May 18, 2017; Published: May 25, 2017


The Common issue at the government of US and Japan is that the US Federal Government and Japanese Central government both have a huge amount of net debt as the result of continued issues of deficit government bonds. The diverged issues are the size of social welfare system, the size of financial return and the relative importance of equity and real estate market. Japan has a larger social welfare system, much smaller financial return and a larger real estate market than equity market compared with those in the US. These points largely influence the stocks and the flows of the households of the US and Japan.

Keywords: System of National Accounts (SNA); Net liabilities; Intergenerational unfairness; Aging population; Household balance sheet


tn: trillion; bn: billion; B4: Before; FRB: Federal Reserve Board/ Federal Reserve Bank; BEA: Bureau of Economic Analysis


I have been watching the SNA data [1], released by Japanese and the US governments for many years. I have just completed the analysis of 2015 data which updates my analysis of 1986-2014 data. By this paper, I would like to point out my summary conclusions on the comparison of major financial issues between Japan and the US.

Materials and Methods

The major data I used for the analysis are Japanese SNA data, the US SNA data and the Japanese consolidated central government balance sheet data from the Ministry of Finance homepage [2]. If you are interested, please look at the raw data from the homepages I noted in the reference section.

Starting from the SNA data, I produced the financial statements by sectors for corporate sector, financial institution sector, general government sector and household sectors. The financial statements I produce include balance sheet, Income statement and cash flows for each sector. I have been making the financial statements for Japan and the US for each sector yearly when new yearly data are released. I also make combined financial statements for total Japan and the US, by adding sector financial statements. Here, internal elimination is not possible so it is not consolidated statements but the adding-up of sector numbers in Japan and the US.

By analyzing the financial statements for sector and the total, I have been trying to identify the most important financial issues for each sector and the country. After identifying the most important issues, I have been trying to evaluate the strategic alternatives to solve the issues. I have published two books on this theme which I showed in the reference section.

This paper compares the financial statements of Japan against those of the US and tried to describe the most important common issues and diverged issues.

Results and Discussion

The common issue

The consolidated balance sheet of Japanese central government: At the end of March 2016, the total consolidated asset of Japanese central government was Y959tn and the total consolidated liabilities were Y1424tn (Figure 1a) [1]. The consolidated balance sheet consolidates general account, special accounts and public entities of the central government and does not include any balance sheets of the local government and the public entities under the local governments. Therefore, the net liabilities were Y465tn for the consolidated central government. By the way, the net liability of the consolidated Japanese central government used to be Y441tn at the end of March 2012 [3]. The net liabilities came neither from the special accounts nor outside legal entities but the general accounts. At the general accounts, the net liabilities were Y553tn at the end of March 2016, as the result of Y292tn asset and Y845tn liabilities including Y807tn government bonds. In recent years, Japanese government has been financing the necessary fund for social welfare thorough issuing a large amount of deficit government bond. The net liabilities have to be repaid by the future younger generations, which did not receive the government service from proceed of the government bonds, causing a vast intergenerational unfairness.