This report presents a detailed analysis of the Flow of Funds statistics (Japan-US-Europe Comparison) for the first quarter of 2025 (as of end of March), published by the Bank of Japan, examining the composition of financial assets and liabilities of financial institutions in each region.
Japanese Financial Institution Asset Composition
Japan's financial institutions hold total financial assets of 4,433 trillion yen, with depository institutions accounting for 2,382 trillion yen (53.7%), other financial institutions 1,370 trillion yen (30.9%), and insurance and pension funds 681 trillion yen (15.4%). In terms of asset composition, loans represent the largest share at 22%, followed by cash and deposits at 15%, debt securities at 6%, and equity securities at 1%. This structure clearly demonstrates the loan-focused operational framework characteristic of Japan's depository institutions.
U.S. Financial Institution Asset Composition
U.S. financial institutions hold total financial assets of $139.1 trillion, with other financial institutions accounting for the largest share at $69.1 trillion (49.7%), followed by insurance and pension funds at $41.6 trillion (29.9%), and depository institutions at $28.4 trillion (20.4%). In asset composition, equity securities hold the highest proportion at 20%, followed by loans at 15%, debt securities at 10%, and investment fund shares at 5%. This structure shows a significantly higher weighting toward equity investments compared to Japan.
Euro Area Financial Institution Asset Composition
Euro area financial institutions hold total financial assets of €93.4 trillion, with other financial institutions accounting for €44.0 trillion (47.1%), depository institutions €37.4 trillion (40.0%), and insurance and pension funds €12.1 trillion (13.0%). In asset composition, equity securities represent a high proportion at 22%, followed by loans at 17%, cash and deposits at 13%, and debt securities at 8%. Similar to the U.S., this demonstrates a strong inclination toward equity investments.
Cross-Country Comparison Characteristics
On the liability side, Japan's financial institutions hold total liabilities of 4,447 trillion yen, with cash and deposits representing the largest component at 39%. The Japan-US-Europe comparison clearly demonstrates through quantitative data that while Japan maintains a traditional banking structure centered on lending, the U.S. and Euro area have progressed toward capital market-oriented financial systems.
The report shows that through Flow of Funds statistics, it is possible to quantitatively understand the structural differences in each country's financial system and the contrasting development patterns where Japanese financial institutions maintain a loan-centered business structure while European and American institutions show an increasing weighting toward equity and securities investments.