Financing deals in Japan's stock market fell sharply last week as investors were forced to sell shares amid the Nikkei's worst decline in more than 40 years, data suggest.

Financing trades, in which stock market investments are increased by borrowing from brokerages, are a common operation among Japanese retail investors. Financing transactions account for about 70 percent of total retail trading in Japan, according to exchange data.

The total value of stocks bought with financing fell by 907 billion yen ($6.15 billion) to 4 trillion yen in the week ended Aug. 9, compared with 4.87 trillion yen the previous week, according to Japan Exchange Group, which runs the Tokyo Stock Exchange. The amount had reached a record high of 4.98 trillion yen in the week ended July 26th.

The Nikkei 225 fell 12.4 percent in a single day on Aug. 5, its biggest one-day drop since 1987, but rebounded 10 percent the next day. As of Aug. 5, the index had fallen 27 percent from its July high of more than 42,000 points. The index has now recovered and as of Thursday's (Aug. 15) close, was at 36,726.64

The sharp drop in financed stock purchases suggests that leveraged retail investors, who account for about 20 percent of the total value of trading at Japanese brokerages, suffered big losses that week and are unlikely to return to the market anytime soon.

While financing trades allow investors to increase trading volume, they can also exacerbate losses when the market falls, forcing investors to sell stocks.