- TOP
- Summary of The Annual Bulletin
- Analysis of Change in Characteristics of Current Consumer Loan Borrowers
Analysis of Change in Characteristics of Current Consumer Loan Borrowers
Hiroshi Domoto Tokyo University Information Science
Osamu Uchida Tokyo University Information Science
In December 2006, the 3 money lending related laws, namely the Money Lending Business Law, Interest Rate Restriction Law and the Investment Control Law passed the Diet as a way to deal with over-indebtedness. This survey was performed primarily to analyze changes in the consumer finance market caused by amendments to laws from the perspective of individuals who use consumer loans.
First is a comparison of the composition of consumer finance borrowers in 2007 and 2008. Money lenders have tightened their loan approval standards due to amendments to laws. As a result, individuals in job categories with unstable incomes, particularly temporary workers, part time and hourly workers, and the self-employed, have become unable to obtain consumer loans. The survey also revealed that individuals with low incomes, individuals belonging to a household with a low income, and individuals with a small amount of savings no longer have access to consumer loans.
Next is a comparison of 2007 and 2008 based on borrowers’ contact with fraudulent lenders during the preceding year. In 2008, 11.1% of those responding to the survey reported contact with fraudulent lenders, one percentage point higher than in 2007. We then compared the fraudulent lender contact rate of consumer loan applicants in 2007 and 2008 by dividing all survey participants into two groups based on whether their loan application was accepted or rejected. The contact rate was the same in 2007 and 2008 for individuals who received a loan as requested. However, for individuals who were unable to receive a loan as requested, the fraudulent lender contact rate increased from 30.1%in 2007 to 34.4% in 2008. The survey further revealed that the portion borrowing from fraudulent lenders was particularly high among individuals who were unable to receive loans for one of four objectives: medical expenses, education expenses for children, ceremonial function expenses, or supplementary business funding.
In addition, a survey of very small businesses was conducted to gather information about their loans. Results of this survey revealed that very small businesses frequently use consumer loans and credit card loans for both ordinary fund and stopgap fund. Furthermore, survey results showed that very small companies have much greater liquidity problems than small and midsized companies even though business sentiment was about the same at all these companies.
