Commercial banking system is the main element of the Japanese financial systems like most other developed economies.  Naturally enough the banks are also the major Japanese Lending Institutions in the financial market.  As lender it extends financial assistance to various sectors, accepts deposits and deals with foreign exchanges.  Most of them are specialized public sector financial institutions and they fund most part of the domestic economy.  At the apex stands the Bank of Japan who is not only the supreme Japanese Lending Institution but also implements the monetary policy.

Till recently, the Japanese Lending Institutions were mostly the banks.  The banking system had been compartmentalized into clearly defined segments since 1980s.  Thus you will find that there were seventy seven commercial and regional banks of which thirteen were major banks.  There were also seven long term credit banks, seven Trust banks, and sixty nine mutual loans and saving banks.  In addition to all these there are several specialized financial institutions functioning as lenders in Japan.

1980s also saw the coming up of a host of non banking lending institutions in Japan.  They dealt with consumer loans or lenen, credit cards, lease and estates.  They took over much of the traditional functions that were carried out by the banks in Japan.  In the initial part of the postwar period, it was the city bank that acted as the Japanese Lending Institution for the large scale enterprises.The regional banks played identical role in respect of the small and medium enterprises.  Till the 1960s it was the Bank of Tokyo that took care of the foreign exchange business. 

Banks dealing with long term credits complemented the part played by regional banks.  They took care of the larger enterprises and gave long term loans to Corporations or the major industries.  Trust banks on the other hand dealt with the small and medium loans.  There were more than eight thousand divergent types of cooperatives that also performed the tasks of Japanese Lending Institutions or lenen.  Major portion of the funds were rooted to the Norinthukin bank, the largest domestic deposit bank in the world. When it came to the 1990s, the five largest banks in the world were Japanese.  They also increased their overseas activities participating in the Treasury bond market of United States. Dai IChi Kangyo, Sumitomo, Fuji, Mitsubishi, and Sanwa were the five largest banks of Japan and the world.

Despite the late domination of the private banking sector as the lending sources in Japan, Government institutions did not remain far behind.  Japan Export –Import bank and Japan Development Bank in the public sector and corporation such as Housing Loan Corporation acted as Japanese Lending Institutions to promote domestic economy.  Main source of their funds was the postal deposits and deposits with the Trust Fund Bureau.  Japan has more than 24,000 post offices and they accept deposits of various types.  They also excel in terms of funds generation due to the Japanese system of highest rate of interest paid by the post offices and tax savings made on the deposits there.  On the other hand the Japan Export Import Bank, also called the Exim Bank has international focus and finances international trade while post offices and trust banks take care of domestic loan requirements.