Despite the fact that the last century was characterized by an impressive increase of cross-border capital flows, Japan remained a relatively closed economy up to the late 90s. Only when the “bubble” burst was the impetus given for more rapid opening up of the economy and the closely related liberalization of the financial sector. In general economic theory sees international financial market integration as an important instrument for increasing economic productivity. Japan, however, remains mired in an ongoing deep financial crisis even following the implementation of this measure. To understand this phenomenon better, this paper connects ideas from endogenous growth theory with the introduction of new rules of the economic game on the financial market. It can be demonstrated empirically that in Japan, the “old” internal institutions on the financial market have continued to exist even after the change in external institutions. Against the backdrop of these tensions, it is unlikely that the formally liberalized financial sector will have any significant positive impacts on Japan’s economic development in the near future.