IMPACT OF JAPANESE

IMPERIAL FORCES ON
PHILIPPINE BANKING
(1942)
SUBTITLE: A HISTORICAL ANALYSIS

PREPARED BY: ALVARADO, IRISH B.

INSTRUCTOR: ACOSTA, JASMIN
 “JAPANESE OCCUPATION OF THE
PHILIPPINES (1942): IMPACT ON BANKING”

INTRODUCTION:

SIGNIFICANCE:
 The Japanese Imperial forces’ entry into Manila in 1942 marked a turning
point in Philippine history.
 This analysis explores how this occupation disrupted and reshaped the
banking sector, revealing the intricate relationship between war, finance,
and governance during this crucial period.
 Understanding these dynamics offers valuable insight into the broader
impact of wartime occupations on economics systems and local
communities.
 BACKGROUND
 In 1942, during World War II, Japanese Imperial forces launched an invasion of the Philippines.
 On January 2nd, they entered Manila, the capital city.
 This marked the beginning of the Japanese occupation of the Philippines, which lasted until 1945.
 The invasion was a significant event in the broader Pacific Theater of the war, as it brought the
Philippines under Japanese control and had far-reaching implications for the region’s history.
 BANKING HALT
Impact of Occupation:
 The entry of Japanese Imperial forces into Manila in 1942 resulted in an immediate halt in
banking operations.
 This interruption was due to the upheaval caused by the occupation and the uncertainties
it brought.
 Filipino banks, in particular, faced operational challenges, as the Japanese Military
Government took control and imposed restrictions on financial activities.
 This disruption had profound implications for the local economy and businesses, creating
a financial void that required addressing.
 “BANKING RESUMPTION”

CONTROLLED RESUMPTION:
 Despite the initial halt in banking operations, the Japanese Military
Government recognized the pivotal role of banks in economic stability.
 On January 3, 1942, they called for the controlled resumption of
banking activities, but with limitations.
 Banking was allowed to resume, but only for Filipino-owned and
Japanese banks.
 This controlled approach aimed to maintain a degree of economic
functioning under Japanese authority while excluding foreign owned
institutions and branches.
 This decisions had for reaching consequences for the banking
landscape during the occupation.
 “TREATMENT OF FOREIGN BANKS”
Enemy Property Status:
 During the Japanese occupation, domestic banks owned by foreign nationals and branches
of foreign banks faced a starkly different fate.
 They were deemed as enemy property by the Japanese Military Government.
 This designation led to the forcible liquidation of these banks and their assets.
 The liquidation process had profound implications not only for the affected banks but also
for the foreign nationals who held interests in these institutions.
 This policy further reshaped the banking landscape in the Philippines during the
occupation.
 “SOUTHERN DEVELOPMENT BANK”
ROLE OF SOUTHERN DEVELOPMENT BANK:
 Amid the wartime disruption of the Philippine banking sector, the Southern Development Bank (Nampo Kaihatsu
Kindo) played a crucial role. It established a branch in Manila in 1942 and assumed several key functions :
1. FISCAL AGENT- The Southern Development Bank acted as the fiscal agent of the Japanese Government in the
Philippines. This role involved managing financial transactions, government funds, and related financial matters
on behalf of the occupying authorities.
2. QUASI-CENTRAL BANK- During the occupation, the Southern Development Bank took on some functions
typically associated with a central bank. This included issuing military notes, which served as a form currency in
the occupied territories.
3. CUSTODY OF CLEARING BRANCHES- The bank was entrusted with the responsibility of overseeing the
clearing branches of other banks, helping to facilitate financial transactions in a controlled manner.
4. DEPOSITS MANAGEMENT- The Southern Development Bank received deposits from various banks operating
under Japanese control. Thereby centralizing a portion of the financial system.
The Southern Development Bank’s multifaceted role in finance and banking underscored its significance as a key
financial institution during the Japanese occupation of the Philippines.
 CURRENCY ISSUANCE
MILITARY NOTE ISSUANCE:
 One of the notable functions undertaken by the Southern Development Bank
during the Japanese occupation was the issuance of military notes. These military
notes served as a form of currency within the occupied Philippines.

DENOMINATIONS AND USAGE:

 The military notes came in various denominations and were used for everyday
transactions in the occupied territories. They were essential for facilitating commerce
and trade, as the usual Philippine peso and foreign currencies were often in short
supply or deemed obsolete during the occupation.

CONTROL AND IMPACT:

 The issuance of military notes by the Southern Development Bank represented a form
of financial control exerted by the Japanese Military Government. It allowed them to
manage and regulate the local economy under their authority. The impact of these
notes on the wartime economy and the lives or ordinary Filipinos was profound, as
they had to adapt to this new currency system.

HISTORICAL SIGNIFICANCE:
 The military notes issued by the Southern Development Bank provide a tangible link
to the economic and financial aspects of the Japanese occupation, shedding light on
the complexities of a wartime economies and the role of banks in such challenging
circumstances.
 CONCLUSION
Summarize the key points and the overall impact of the Japanese Military Government
on the Philippine banking sector during this period.
RECAP:
 In summary, the Japanese Military Government's occupation of the Philippines in 1942
brought significant changes to the banking sector. Key points include the halt in banking
operations upon entry, the controlled resumption of banking limited to Filipino-owned
and Japanese banks, and the treatment of foreign banks as enemy property.
Role of Southern Development Bank
 The Southern Development Bank emerged as a central figure, acting as a fiscal agent,
quasi-central bank, and custodian of clearing branches. It played a vital role in issuing
military notes and managing deposits, contributing to financial centralization during the
occupation.
Overall Impact:
 The Japanese occupation had a profound impact on the Philippine banking sector. It
reshaped the financial landscape, imposed new currency systems, and centralized
financial control. This period serves as a unique historical case study of how war,
governance, and finance intersect, leaving lasting legacies on the nation's economic
history.
Legacy and Insight:
 Studying this historical episode offers insights into the adaptability of financial
institutions during wartime and highlights the complex dynamics between occupation
forces and local economies. It underscores the resilience of financial systems in
challenging circumstances and the enduring impact of such events on a nation's history.
QUESTION AND ANSWER
Open the floor for question and discussions.
THANK YOU FOR
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