The Japanese consumer finance market and its institutional changes since the 1980s

Abstract

We assert, in this article, that the joint transformation of public perception about households’ over-indebtedness and financial deregulation had important implications on the government decision to reform overall consumer credit between 2005 and 2010. On the one hand, the development of collective actions by groups of lawyers to defend borrowers from moneylenders’ abusive practices represents a source of change in the public opinion about over-indebted individuals in the context of long economic stagnation. A systematic press article analysis from 1977 to 2006 shows that the rising number of these collective actions since the early 1990s may have gradually increased the political salience of social issues related to the unsecure loan market. On the other hand, financial deregulation has been a source of change by allowing banks to enter the consumer finance market since the early 2000s. Banks entry into this market transformed the logic of complementarity among traditional consumer credit actors (Shinpan, credit card companies and sarakin) in a general context of legal consumers’ protection reinforcement. Thus, evolution of Japanese consumer finance's regulation is particularly relevant to illustrate the forces of institutional change and its consequences.