In this paper, we will discuss the details of the compilation process of asset-liabilitymatrix from flow-of-funds account (financial balance sheets) taking the example ofJapan 1954-1999. Asset-liability matrix is a sector-by-sector square matrix, so theadvantage is that we can apply the tremendous asset that the input-output analysis hasaccumulated since the early days of its development. However, input-output andasset-liability matrices are not necessarily identical twins. One of the leadingpeculiarities of the asset-liability matrix is that two distinct sector-by-sector matricesare derived from a set of balance sheets. The first one describes the propagation processof fund-raising while the other one depicts that of fund-employment. When there arediscrepancies in the valuation of assets and liabilities, the magnitude of the dispersioncould be different in one system from another. This will give us a clue to the generationmechanism of financial bubbles.