Personal loans in Japan are provided by three types of providers. First, there are large, traditional banks, with a long history. Their big advantage is the availability of loans and branches of these banks. Loans are also provided by specialized consumer credit companies. These are often owned by large, multi-national corporation. For example, Acom, one of leading consumer credit companies in Japan, is owned by Mitsubishi UFJ Financial Group. The advantage of these loans is their availability when these companies are willing to serve customers who do not have a bank loan. A big role is played by psychology, when many people feel shame when they go to apply for a loan to the bank and often needs a guarantor.[1]
On the Japanese market, there are companies that operate at so-called gray zone, sometimes called sarakin. According to estimations, about 10% of the population borrowed from them and there are about 10,000 companies like that on Japanese market.[1] Interest rates were as high as 29.2%. This rate was capped to 15-20% p.a.[1]
On Japanese market, it is not as common to work with credit score as with western markets. Every company and bank uses its own credit rating model without any help of credit bureau.[1]
Many regional banks are facing several obstacles – high risk-aversion in Japanese population in general. Secondly, the competition is increasing on the market and legal framework is getting stricter. Finally, many young people are moving to big cities, where they are handled by big banks.[2] This led to the merger of the Bank of Yokohama and Higashi-Nippon Bank.[3]
Last and most recent platform, is P2P lending. There are only few operators in Japan running this platform so this kind of distribution channel is still minor.[4][5]
^ abcd"Lenders of first resort". The Economist. 22 May 2008.
^"Consumer lending in Japan – susceptibility to macro events and foray into new markets". blog.nucleussoftware.com/.
^"Bank of Yokohama, Higashi-Nippon Bank say considering merger". reuters.com. 3 November 2014.
^"Lenders of first resort". The Economist. 2008-05-22. Retrieved 2015-09-05.
^"P2P Lending In Japan – The Current Situation". P2P-Banking.com. 2014-10-15. Retrieved 2015-09-05.
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