Asia Focus

February 2007
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Japan’s New Consumer Finance Law

Author(s):

On December 13, 2006, the Japanese Diet enacted legislation revising the Money Lending Business (MLB) Law. The revisions to the MLB Law will likely have a major impact on Japan’s consumer finance business by reducing profits and triggering consolidation. While the major consumer finance companies (CFCs) have announced steps to confront these challenges, the success of these strategies in the new lending environment is uncertain. Nevertheless, Japanese banks continue to rely on CFC expertise to assist their expansion into retail lending, and overseas investors have maintained their holdings in CFCs. Concerns remain about the potential economic impact of the law. This Asia Focus report discusses the law and explores its potential impact on Japan’s economy.

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