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Japanese SMEs and the Credit Guarantee System after the Global Financial Crisis

Author

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  • Nobuyoshi Yamori

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper provides a brief explanation of the Japanese public credit guarantee system and analyzes what role it played during the global financial crisis. The author conducted a questionnaire survey of small and medium-sized enterprises (SMEs) in Aichi Prefecture, the prefecture most seriously hit by the crisis, in collaboration with the Aichi-ken Credit Guarantee Corporation. Using the survey, which provides valuable information about the usage of the credit guarantee program, this paper finds that the credit guarantee system was effective in protecting the economy from collapsing. The system was so generous that now all SMEs want it to remain unchanged. However, as the generous system brings heavy financial burdens on the government and, more seriously, discourages firms and banks from improving their efficiencies, the author insists that reforms, such as limiting the target and the guarantee coverage, are inevitable.

Suggested Citation

  • Nobuyoshi Yamori, 2014. "Japanese SMEs and the Credit Guarantee System after the Global Financial Crisis," Discussion Paper Series DP2014-26, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2014-26
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2014-26.pdf
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    References listed on IDEAS

    as
    1. Uesugi, Iichiro & Sakai, Koji & Yamashiro, Guy M., 2010. "The Effectiveness of Public Credit Guarantees in the Japanese Loan Market," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 457-480, December.
    2. Ono, Arito & Uesugi, Iichiro & Yasuda, Yukihiro, 2013. "Are lending relationships beneficial or harmful for public credit guarantees? Evidence from Japan's Emergency Credit Guarantee Program," Journal of Financial Stability, Elsevier, vol. 9(2), pages 151-167.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Huseyin OZTURK & YASUDA Yukihiro, 2021. "We Are Alike: Capital Structure of Japanese SMEs Across Prefectures," Discussion papers 21092, Research Institute of Economy, Trade and Industry (RIETI).
    2. Yoshino, Naoyuki & Taghizadeh-Hesary, Farhad, 2019. "Optimal credit guarantee ratio for small and medium-sized enterprises’ financing: Evidence from Asia," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 342-356.
    3. Solomon Abadi Dirar & Tekeste Berhanu & Dereje Getachew & Hossein Azadi, 2017. "Financial product development and members’ voluntary saving behavior in saving and credit cooperatives in Tigray: A case study in Endamohoni Woreda," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1279864-127, January.
    4. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Fukuda, Lisa & Rasoulinezhad, Ehsan, 2021. "A model for calculating optimal credit guarantee fee for small and medium-sized enterprises," Economic Modelling, Elsevier, vol. 95(C), pages 361-373.
    5. Ruzhi Xu & Tingting Guo & Huawei Zhao, 2022. "Research on the Path of Policy Financing Guarantee to Promote SMEs’ Green Technology Innovation," Mathematics, MDPI, vol. 10(4), pages 1-24, February.
    6. Hyun, Junghwan, 2017. "Trade credit behavior of Korean small and medium sized enterprises during the 1997 financial crisis," Journal of Asian Economics, Elsevier, vol. 50(C), pages 1-13.
    7. Randall Jones & Yosuke Jin, 2017. "Boosting productivity for inclusive growth in Japan," OECD Economics Department Working Papers 1414, OECD Publishing.
    8. Eggers, Fabian, 2020. "Masters of disasters? Challenges and opportunities for SMEs in times of crisis," Journal of Business Research, Elsevier, vol. 116(C), pages 199-208.

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    More about this item

    Keywords

    Credit guarantee system; Japan; Financial crisis; Questionnaire; Small and Medium-sized Enterprises;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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