2014 Volume 1 Pages 31-40
Simulation of economic impact of the Amendment of the Money-Lending Business Control and Regulation Law, which was promulgated in December 20, 2006 and put fully into force in June 18, 2010, was made and the result was that the total economic impact was minus 8 to 19 trillion yen. The total economic impact consists of the followings: -GDP impact of reduction of consumption expenditure due to reduction of money-lending amount: minus 19 to 31 trillion yen -GDP impact of reduction of interest income in money-lending firms: plus 2 to 3 trillion yen -GDP impact of redemption money from money-lending firms to debtors: plus 9 trillion yen. The simulation results indicate that the Law declined the Japanese economy to an unnegligible extent although the Law functioned as a deterrent against the debtors who were not capable of return their debts, and there would be necessary to have further discussion if the Law was appropriate for Japanese economy. The results of simulation by regulation were the followings: GDP impact of restriction of new entry and strengthening of supervision: minus 2 trillion yen GDP impact of abolition of the so-called "gray-zone" interest rates: minus 19 to 28 trillion yen GDP impact of total volume control: minus 7 to 10 trillion yen. The simulation results indicate that abolition of the gray-zone interest rate has the biggest effect to GDP impact. This effect may also be due to the effect of the judgment by the supreme court of Japan but in any case, it can be said that this regulation had the biggest effect to the money-lending industry. It would be necessary to consider not only economic effect but also how judgment is to be made in the policy making process.