Sarakin
Encyclopedia
is a Japanese
term for a legal moneylender
who makes unsecured loans at high interest. It is a contraction of the Japanese words for salaryman
and loan
. An illegal loan shark
who goes above legally permitted maximum interest rates is called Yamikin, short for Dark Finance (Yami Kinyu), and many of them lend at 10% for 10 days.
Around 14 million people, or 10% of the Japanese population, have borrowed from a sarakin. In total, there are about 10,000 firms (down from 30,000 a decade ago); however, the top seven firms make up 70% of the market. The value of outstanding loan
s totals $100 billion. The biggest sarakin are publicly traded and often allied with big banks.
Sarakin fill an important niche in Japanese society. Consumer and small-business lending
has long been one of the weak points of the Japanese financial system
. Although the economy has traditionally been bank-dominated, banks have preferred to lend to large firms with strong collateral
(land and real estate) rather than to individuals or smaller firms. Banks' underdeveloped credit risk assessment techniques also restricted their entry into consumer and small-business financing. Thus, where consumer borrowing from a bank is considered shameful and often requires a guarantor
, sarakin loans can be as little as $
100, borrowers need identification but not collateral, and transactions at kiosks akin to automated teller machine
s take just a few minutes. Loan rates used to be as high as 29.2%, substantial given that official interest rates are near zero. After an outcry at the high levels of debt and the repayment tactics, a law in 2006 capped interest rates at 20% by 2010, and regulated collection methods. Loans were also not allowed to exceed one-third of an annual salary.
reaching one of the highest rates worldwide. Many sarakin used to be affiliated with organized crime
groups (yakuza
) and a scandal blew up in the early 1980s because of their unsavory, if effective, collection methods, such as showing up at a funeral
or wedding
to demand money, or using a loudspeaker in front of homes, schools or workplaces to broadcast non-payment of debt. These actions led to the term sarakin-jigoku, or "loan shark
hell", being coined by the media and legislation which set the code of conduct for money collection.
Japanese language
is a language spoken by over 130 million people in Japan and in Japanese emigrant communities. It is a member of the Japonic language family, which has a number of proposed relationships with other languages, none of which has gained wide acceptance among historical linguists .Japanese is an...
term for a legal moneylender
Moneylender
A moneylender is a person or group who offers small personal loans at high rates of interest.-See also:* Microfinance - provision of financial services to low-income individuals....
who makes unsecured loans at high interest. It is a contraction of the Japanese words for salaryman
Salaryman
refers to someone whose income is salary based; particularly those working for corporations. Its frequent use by Japanese corporations, and its prevalence in Japanese manga and anime has gradually led to its acceptance in English-speaking countries as a noun for a Japanese white-collar...
and loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
. An illegal loan shark
Loan shark
A loan shark is a person or body that offers unsecured loans at illegally high interest rates to individuals, often enforcing repayment by blackmail or threats of violence....
who goes above legally permitted maximum interest rates is called Yamikin, short for Dark Finance (Yami Kinyu), and many of them lend at 10% for 10 days.
Around 14 million people, or 10% of the Japanese population, have borrowed from a sarakin. In total, there are about 10,000 firms (down from 30,000 a decade ago); however, the top seven firms make up 70% of the market. The value of outstanding loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s totals $100 billion. The biggest sarakin are publicly traded and often allied with big banks.
Sarakin fill an important niche in Japanese society. Consumer and small-business lending
Consumer finance
Alternative financial services in the United States refers to a particular type of financial service, namely sub-prime lending by non-bank financial institutions. This branch of the financial services industry is more extensive in the United States than in some other countries, because the major...
has long been one of the weak points of the Japanese financial system
Japanese financial system
The main elements of Japan's financial system are much the same as those of other major industrialized nations: a commercial banking system, which accepted deposits, extended loans to businesses, and dealt in foreign exchange; specialized government-owned financial institutions, which funded...
. Although the economy has traditionally been bank-dominated, banks have preferred to lend to large firms with strong collateral
Collateral (finance)
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
(land and real estate) rather than to individuals or smaller firms. Banks' underdeveloped credit risk assessment techniques also restricted their entry into consumer and small-business financing. Thus, where consumer borrowing from a bank is considered shameful and often requires a guarantor
Surety
A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
, sarakin loans can be as little as $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
100, borrowers need identification but not collateral, and transactions at kiosks akin to automated teller machine
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...
s take just a few minutes. Loan rates used to be as high as 29.2%, substantial given that official interest rates are near zero. After an outcry at the high levels of debt and the repayment tactics, a law in 2006 capped interest rates at 20% by 2010, and regulated collection methods. Loans were also not allowed to exceed one-third of an annual salary.
"Loan-shark hell"
Strict and often bullying loan collection techniques practiced by sarakin, combined with the importance in Japanese culture of "saving face", have driven many small-business men to despair and contributed to suicide in JapanSuicide in Japan
Suicide in Japan has become a significant problem nationally. Factors in suicide include unemployment , depression, and social pressures. In 2007, the National Police Agency revised the categorization of motives for suicide into a division of 50 reasons with up to three reasons listed for each...
reaching one of the highest rates worldwide. Many sarakin used to be affiliated with organized crime
Organized crime
Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
groups (yakuza
Yakuza
, also known as , are members of traditional organized crime syndicates in Japan. The Japanese police, and media by request of the police, call them bōryokudan , literally "violence group", while the yakuza call themselves "ninkyō dantai" , "chivalrous organizations". The yakuza are notoriously...
) and a scandal blew up in the early 1980s because of their unsavory, if effective, collection methods, such as showing up at a funeral
Japanese funeral
A Japanese funeral A Japanese funeral A Japanese funeral (葬儀 sōgi or 葬式 sōshiki）includes a wake, the cremation of the deceased, a burial in a family grave, and a periodic memorial service. According to 2007 statistics, 99.81% of deceased Japanese are cremated...
or wedding
Japanese wedding
Japanese wedding customs fall into two categories: traditional Shinto ceremonies, and modern Western-style weddings. In either case, the couple must first be legally married by filing for marriage at their local government office, and the official documentation must be produced in order for the...
to demand money, or using a loudspeaker in front of homes, schools or workplaces to broadcast non-payment of debt. These actions led to the term sarakin-jigoku, or "loan shark
Loan shark
A loan shark is a person or body that offers unsecured loans at illegally high interest rates to individuals, often enforcing repayment by blackmail or threats of violence....
hell", being coined by the media and legislation which set the code of conduct for money collection.
List of sarakin
- AcomAcomis one of Japan's largest consumer loan companies, or sarakin. The name "Acom" stands for Affection, Confidence and Moderation. The company was founded by Masao Kinoshita, who was later replaced by his eldest son Kyosuke Kinoshita, the current chairman of the company...
- AifulAifulis one of the largest Japanese consumer finance companies. Currently the company is based in Kyoto and has annual profits of close to ¥100 billion on over ¥2 trillion worth of loans. [This article is out-dated and inaccurate...
- TakefujiTakefujiis a Japanese consumer finance company, or sarakin. On September 28, 2010 it filed a petition for commencement of a corporate re-organisation under the Japanese Corporate Reorganisation Act.-Services:...
- PromiseSumitomo Mitsui Banking Corporationis a Japanese bank based in Yurakucho, Chiyoda, Tokyo, Japan. It is a member of the Sumitomo Group and Mitsui Group. As of the year 2009, SMBC was the second largest bank in Japan in terms of assets.-History:...