In this paper, we attempt to blend economic theory with an understanding of the historical context and regulation of Japanese financial markets, particularly during the 1950s and 1960s. The historical and regulatory context is critical since it represents the framework within which the economic forces operated. That is, we are interested in examining how a particular structure, characterized by controlled interest rates, segmentation of markets and functions, and limited entry, gave rise in understandable ways to distinctive corporate financial practices.