Consumer finance firms hurting

May 4, 2007
By Ken Worsley

Japan’s consumer finance firms are in trouble. Last year, the government passed laws regulating collection tactics and practices such as taking out life insurance policies on their own customers (which could be collected on in the case of suicide). Many predicted that these firms would encounter financial difficulties, but the situation is worse than expected, as the International Herald Tribune tells us:

Aiful, the largest consumer lender in Japan by assets, and its three nearest rivals had a combined $14 billion loss last year as demands for interest refunds forced them to add more to provisions.

Over at Seeking Alpha, John Bethel has published a chart showing Takefuji’s share price over the past ten months.

With Takefuji and other consumer finance firms bleeding cash, downsizing and seeing their share prices fall, what will the effects be? For one, we’re seeing a decline in online advertising expenditures. There are also certainly far fewer ads for consumer finance companies on television. Remember the little chihuahua from the Aiful ads? He’s about due for a VH-1 “Where are they now?” special.

Filed Under Advertising, Business