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Deutsches Institut für Japanstudien

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Deutsches Institut für Japanstudien
3-3-6 Kudan-Minami, Chiyoda-ku, Tokyo 102-0074
Tel: 03 – 3222 5198, Fax: 03 – 3222 5420


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Registration Info

The lecture will be given in English. It will take place on Tuesday, January 11th 2005 at 6.30 p.m. at the DIJ. Admission is free, but please register by January 11th with Ms. Dinkel at the DIJ.



Private Debt and Social Welfare in Japan: Consumer Finance, the "Middle-Risk Gap", and Japan's Social Contract

January 11, 2005 / 6.30 P.M.

Ulrike Schaede, (Professor, University of California, San Diego)

 The recession of the 1990s has caused a social crisis in Japan, with unemployment, homelessness, private household debt, and suicides reaching unprecedented highs. These problems coexist with the macroeconomic phenomenon of a pronounced “middle-risk gap” in Japan’s interest rate structure. This gap suggests that Japanese banks are unwilling to lend to small firms in the middle market, all the while money lenders and loan sharks earn high returns at rates exceeding 20% p.a. This paper examines the social problems and the interest rate structure as they relate to Japan’s social contract. Because the postwar system of lifetime employment made the build-up of a well-funded public assistance system less important, the government now offers support to unemployed through employment creation measures, such as highly subsidized loans to defaulting small firms. These programs are not only increasingly ineffective in providing a social safety net, they also distort markets, as evidenced in the interest rate structure, and inhibit economic reforms in Japan.

Professor Schaede is Associate Professor at the Graduate School of International Relations and Pacific Studies, University of California, San Diego. She is an authority on Japanese business and management; regulation and government-business relationships in Japan; Japanese financial markets; antitrust; and corporate strategy in Japan. Her major areas of research have included the structure of financial markets, the role of trade associations and antitrust policy in Japan, and the role of the government in Japan’s regulatory system. Her ongoing research project concerns venture capital and small-sized companies in Japan.