Sarakin

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Sarakin (サラ金, Sarakin^?) is a Japanese term for moneylender, or loan shark. It is a contraction of the Japanese words for salaryman and cash.

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 loans totals $100 billion. The biggest sarakin are publicly traded and often allied with big banks.^[1]

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.^[2] 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 machines 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.^[1]

[edit] "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 helped give Japan one of the highest suicide rates worldwide.^[2] Many sarakin used to be affiliated with organized-crime groups and a scandal blew up in the early 1980's because of their unsavory, if effective, collection methods. Intimidation, harassment in the form of tirades outside deadbeats' homes, as well as outright violence, were all tools of the trade.^[3] These actions led to the term sarakin-jigoku, or 'loan shark hell', being coined by the media.