Lessons from Product Safety Regulation for Reforming Consumer Credit Markets in Japan and Beyond: Empirically-Informed Normativism

Abstract

The Global Financial Crisis has prompted belated re-regulation of consumer credit markets in major economies world-wide, but much work remains in progress, and Japan had already re-regulated in 2006. This article first summarises our better understandings nowadays about the operation of these markets in various jurisdictions, including Japan, as a basis for better policy-making. Chicago School economics has been further discredited; information economics and especially behavioural economics provide more compelling explanations and recommendations. Cultural risk cognition studies and related political theory also provide important insights. However, these fields of study mainly provide empirically-informed normative perspectives justifying why we should re-regulate consumer credit services. Consequently, this article also takes a closer look at how to do so. In particular, it teases out analogies with contemporary regulation securing the safety of tangible consumer products, and calls for a new duty on lenders to notify regulators of abnormal problems arising from services they have supplied. This should make the ‘regulatory enforcement pyramid’ both more effective and legitimate, reducing the potential for further financial crises.

Keywords: Consumer Law, Consumer Credit, Financial Markets Regulation, Product Safety Regulation, Product Liability, Comparative Law, Asian Law, Commonwealth Law

JEL Classification: K10, K13, K30, K33