Heavy debtors and suicide victims have been increasing in Japan. Some
of these have excessive debts, called “multiple consumer debts”. So Japan
Diet passed a bill bringing down the maximum allowable interest rate to
20%. But basic problem of these heavily indebted people is that they borrow
money too much to repay. We investigate the rate of time preference of
these people with the hyperbolic discounting effect. And we suggest situation
that people need to take out consumer loans. This paper also considers
the reducing interest rate causes consumer finance market to shrink. We
also analyze consumer finance companies by using Stiglitz and Weiss (1981)
model.
Key Words: Consumer Finance, Regulated Maximum Interest Rate, Hyperbolic
Discounting.
JEL: D11, D82, G29.
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