2023 Volume 10 Pages 3-17
In December 2006, the Japanese government revised the Money Lending Business Law (MLBL), under the coalition administration of the Liberal Democratic Party (LDP) and New Komeito. The law compelled on the non-bank market excessive regulations which cannot be seen in other advanced countries. By this law revision, the cap rate was reduced from 29.2% to 15-20% per annum (cap rate reduction). In addition, the Law obliged submission of a withholding tax record, etc. upon screening, and banned in principle lending exceeding one third of an individual annual income (cap amount regulation).
The discussion process in MLBL revision in 2006 went too hastily, as arguments based on emotion went ahead and the data based scientific validations were utterly stifled. Indeed, the user base with lower creditworthiness, especially owners of micro-entities, faced a severe credit squeeze. Therefore, the Cabinet Office’s Regulatory Reform Council, which has questioned the effectiveness of the law, proceeded with its investigation into this law, including interviews with officials from the Financial Services Agency, since June 2006. Although this work was actively pursued, after Japan's administration changed from the LDP-Komeito coalition to the Democratic Party (DPJ) in September 2009, the Regulatory Reform Council's investigation was brought to a halt. As a result, MLBL was fully enforced in June 2010 under the Democratic administration.
However, immediately after MLBL was fully enforced, Osaka Prefecture and formal committees of the major political parties in the Diet began to work to undertake a drastic review of MLBL from the standpoint of users. Therefore, this paper investigates efforts to revise the MLBL that was discussed by Osaka Prefecture and the major parties in the Diet during June 2010, when the full enforcement of the law, and December 2012, when the DPJ was defeated by the LDP and Komeito. Unfortunately, the movement to revise MLBL has gradually disappeared under the administration of the LDP and Komeito.
