ABSTRACT
The credit supplementation system in Japan is composed of a credit guarantee system operated by the 51 credit guarantee corporations established throughout Japan and a credit insurance system operated by the Japan Finance Corporation. The credit guarantee system and the credit insurance system function together to enable the credit supplementation system in Japan to fulfill the important task of facilitating the smooth supply of business funds for small and medium-sized enterprises (SMEs), and it plays a vital role in the Japanese government’s SME financial policy. The Japan Finance Corporation is a comprehensive policy-based financial institution fully owned by the Japanese government, and its credit insurance sub-unit reinsures guaranteed liabilities provided by credit guarantee corporations.
Through repeated revisions, the current credit insurance system has functioned and adapted to support the credit guarantee system and has greatly contributed to establishment, growth/development, and preventing bankruptcy of SMEs, including at times of crisis. The Small Business Credit Insurance Law was amended in June 2017, and the system has been expanded to meet the financial demands that arise at various SME stages, from startup, business expansion, and business succession, to times of credit squeeze due to a large-scale economic crisis or disaster.
