Press Conference by Kaoru Yosano, Minister of Finance and Minister for Financial Services and Economic and Fiscal Policy
February 24, 2009
[Questions and Answers]
Yesterday, SFCG, a money lender, went bankrupt. It can be expected that the bankruptcy will have an impact on the fund-raising condition of small and medium-size enterprises (SMEs), a situation which you have been worried about. It seems that the environment surrounding money lenders is severe. Could you tell us what impact you expect this will have on the fund-raising condition of SMEs, including the impact of yesterday’s bankruptcy?
For one thing, I do not think that that type of business has reached a dead end. Rather, I think that the Supreme Court’s ruling that interest overcharges are illegal and must be paid back has had a very serious impact not only on “shoko” loan (small business loan) lenders but on the entire money lending business.
I think that SFCG had been feeling the direct hit of the credit crunch since last year because of its lopsided dependence on foreign investment funds and particular banks as the sources of its funds rather than because of factors related to lenders.
Therefore, this will not lead to a situation in which SMEs in general face a credit crunch. Of course, companies involved in “shoko” loans will face difficulties. However, I hope that such companies will utilize loans by government financial institutions and the government guarantee scheme. Also, what I hope they will do first is make use of the consultation services at the municipal and Tokyo Metropolitan government levels.
Forgive me for asking a question similar to one I asked you last week, but how do you view the continuing drop in New York stock prices and what do you think of the concern that Japanese stock prices — stock trading will start soon — may move in tandem with New York stock prices?
If past experience is any guide, a negative impact is expected on Japanese stock prices, as the influence of New York stock prices are so great as to prompt suggestions that the Tokyo market is a mirror image of the New York market. A stock price drop has a larger impact than may be expected. There are a lot of things that will be negatively affected by it, including banks’ capital in particular as well as life insurance companies’ investment portfolios and the assets of people holding shares.
This is inevitable because stock prices are determined by the market. However, it is not desirable that stock prices should continue to drop while producing an unduly negative impact in the absence of buyers due to overly strong selling pressure.
Last Friday, I discussed what would be general measures to be taken in relation to stock prices with the staff of the Ministry of Finance, the Financial Services Agency and the Cabinet Office, and I think we will have to consider a variety of measures while watching stock price movements in the Tokyo market.
In relation to stock prices, yesterday, Chairman Mitarai (of Nippon Keidanren) called for an economic stimulus package worth about 25 trillion yen and expressed his hopes for the resumption of stock purchases by the purchase organization (Banks’ Shareholdings Purchase Corporation). Am I correct in understanding that measures you will consider in relation to stock prices will include these issues?
Yes, you are.
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