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- On the Introduction of Total Loan Amount Ceiling on Japanese Consumer Finance Market
On the Introduction of Total Loan Amount Ceiling
on Japanese Consumer Finance Market
Daisuke Higuchi
Hiroshi Domoto
Ryohei Tanabe
Tokyo University of Information Sciences
We conducted qualitativeanalyses on the impact of introduction of loan amount ceiling on the Japanese consumer finance market.
Under the new regulation, which took effect on July 2011, an individual cannot make consumer finance loans over one third of the person’s annual income. Since the regulation has been introduced for over two years, a question arises how the regulation contributes to the reduction of the over-indebtedness.
An investigation was conducted to evaluate the effects of introduction of the regulation by utilizing long-term qualitative data from 7 consumer finance companies. We expected to see any improvements of financial situations of borrowers if the regulation worked toward its goal: reduction of over-indebtedness.
The results, however, show that the achievements of the regulation aren’t improving the consumer finance market as expected.