Re-Regulating Unsecured Consumer Credit in Japan: Over-Indebted Borrowers, the Supreme Court, and New Legislation

30 Pages Posted: 5 Oct 2007 Last revised: 9 Jan 2008

See all articles by Souichirou Kozuka

Souichirou Kozuka

Gakushuin University

Luke R. Nottage

The University of Sydney Law School; The University of Sydney - Australian Network for Japanese Law

Date Written: September 2007

Abstract

This paper begins to fill a gaping void in the English-language literature on a pressing socio-economic problem in Japan - the rise in unsecured consumer lending particularly since the early 1990s, followed by a partial fall due primarily to stricter enforcement recently of interest rate restrictions. Parts I and II reveal broad parallels with consumer over-indebtedness and lenders' business models in other post-industrial capitalist societies, although for example cash loans remain distinctively more common in Japan than credit card based lending. Part III outlines the statutory regime until 2005, and the caps and other reforms introduced in late 2006 that are having a major impact on Japan's consumer credit providers - as well as other financial institutions. The reforms were pushed along by judgments from Japan's highest Court, which has deployed sometimes purposive and sometimes literalist interpretations to benefit consumers. Such phenomena pose challenges for certain longstanding paradigms advanced by commentators outside Japan to explain the country's law and society. Those perspectives and several others are outlined in Part IV, the Interim Conclusions, along with other implications for consumer law generally, which are pursued in a companion paper.

Keywords: Japan, Asian law, consumer law and policy, consumer credit, contracts

JEL Classification: D18, K23, N25, O16, P11

Suggested Citation

Kozuka, Souichirou and Nottage, Luke R., Re-Regulating Unsecured Consumer Credit in Japan: Over-Indebted Borrowers, the Supreme Court, and New Legislation (September 2007). Sydney Law School Research Paper No. 07/62. Available at SSRN: https://ssrn.com/abstract=1019392 or http://dx.doi.org/10.2139/ssrn.1019392

Souichirou Kozuka

Gakushuin University ( email )

1-5-1 Mejiro
Toshima-ku Tokyo 171-8588
Japan

Luke R. Nottage (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

The University of Sydney - Australian Network for Japanese Law

Room 640, Building F10, Eastern Avenue
Sydney, NSW 2006
Australia

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