The revised Money Lending Business Law (MLBL) which entered into effect in June 2010 imposed on the non-bank market excessive regulations which cannot be seen in other advanced countries. As a side effect of the law, some of those who have difficulty borrowing from legitimate money lenders, including consumer finance companies, have been drained to the illegal loan (Yamikin) market in Japan.
However, unlike the form that was assumed before the law was revised, today’s loan sharks (Yamikin) have built various business models that take advantage of the borrower’s weaknesses by targeting their loans on the borrowers who have difficulty borrowing for specific reasons, to prevent the incidents from coming to the surface. For example, the illegal lenders that specialize in public servants and employees of established companies with stable incomes who have incurred multiple debts have created a business model that allows them to collect a portion (or all) of salaries and bonuses, while factoring in the occurrence of some delinquencies. In case of arrears, they psychologically threaten the borrower by sending a reminder to the borrower’s workplace.
Moreover, since the enforcement of MLBL, loan sharks (Yamikin) disguised as legitimate private loans to women with attributes such as single mothers and housewives who have clearly had difficulty borrowing have proliferated on the Internet. But the reality is that it is an insidious loan shark that lends money on the condition of having sexual relations.
In other words, today’s illegal lenders, evolving in various distorted forms, seek to evade police investigation by taking advantage of the weakness of their target clientele and discouraging them from filing charges against them. Based on interviews with investigators and court records, this paper reports on Japan’s illegal loan market, which is infiltrating society as an atypical financial system.
View full abstract