...The year ending March 2008 (FYE08) was a difficult year for Japan's credit associations (shinkin), as it was for the country's financial services sector generally. Their performance was affected by a drop in operating profit and losses on investment securities -- both realised and/or latent -- and there was no material improvement in asset quality compared with the previous year. FYE09 has so far proved to be an even more difficult year, with local economies becoming increasingly stagnant following the collapse in September 2008 of Lehman Brothers, among others. A new development in 2009 is that the government has made JPY12trn public funds available to all deposittakers in Japan, including shinkin and their central organisation, the Shinkin Central Bank (SCB). By increasing the capacity of local lenders to take credit risks, the government hopes that SMEs will be able to gain access to funding. However, so far, none of the shinkin has applied for any of these public funds: technically,...
