Japan's capital formation enigma and the role of its life insurers

The life insurance industry in Japan played a critical role in capital formation during the post-war reconstruction of the Japanese economy. By the 1980’s, the role of the life insurance industry was changing. And over the past 20 years, 90% of the increase in assets of Japanese life insurers has been allocated to Japanese government bonds. This raises questions about Japan’s economy and the sustainability of its current course.