2. Supply of Risk Capital for Regional Development in Japan

In this chapter, we indicate the limits of the present form of financial intermediation, and show how funds such as the Hometown Investment Trust (HIT) funds can point the way to the future. As Japan’s domestic financial system has transitioned from a multi-layered to a single-layered form, it has become clear that excessive reliance has been placed on indirect financing, which has reached its functional limit in financial intermediation. Despite over 10 years of discussions in various public–private forums, there has unfortunately been no significant change in the financial structure itself (Akai, Ann Soc Econ Stud Securities 45, 2007a). Nevertheless, the direct–indirect responses to the international financial crisis of 2008 have given rise to several fascinating public–private initiatives for supporting local economies.