by Taiki Murai and Gunther Schnabl
Similar to the credit unions in the US, the goal of the Japanese Shinkin banks is the promotion of the sound development of the regional economy. The members of these non-profit cooperatives are small- and medium-sized enterprises as well as natural persons from the respective regions of Japan. The Shinkin banks manage deposits, perform banking operations and make loans. Until the Japanese bubble economy burst in the early 1990s, they were the backbone of the regional economy in Japan. Since then, however, the business model has been gradually changing, driven by the Bank of Japan. The upshot is that the Shinkin banks’ business activities have been gradually turning away from the regions and, therefore, their original aim.