Role of Financial Institutions on Growth of Small and Medium Enterprises in Japan

  • Asahi Yoshino Prakash Nagoya University
  • Dr. Haruto Akira Liang Nagoya University

Abstract

Small-scale enterprises highly influence the growth of a country. Small-scale enterprises are fundamental in creating employment opportunities for many people, notably in rural areas. Consequently, the study was determined to examine the role of financial institutions in the growth of small and medium enterprises in Japan. The study did a literature review to explore the findings from the preceding studies. The study findings from the majority of the studies showed that financial institutions play a critical role in the growth of small and medium enterprises. The financial institutions provide services and loans that spur the growth of small and medium enterprises. In addition, the financial institutions are involved in providing the startup capital and this increases the sustainability of the small firms. In some instances, the financial institutions provide capacity building to the small enterprises, increasing their skills and knowledge in the management process. The small-scale enterprises encounter many difficulties and the financial instructions become a channel for accessing funds. The factors that limit small and medium enterprises from accessing the loans from the financial institutions is mainly lack of collateral. The study concluded that financial institutions determined the growth of small and medium enterprises in Japan to a large extent. The study recommended that drastic and effective financial policies which directly increase accessibility to available credits from financial institutions ought to be set in Japan. The government needs to sale up a framework that will make the financial institutions increase their lending to the small and medium enterprises. A specialized borrowing system needs to be developed in the financial institutions to carry out small-scale lending functions.

Keywords: Financial institutions, growth, small scale enterprises, Japan

Author Biographies

Asahi Yoshino Prakash , Nagoya University

Master student, Nagoya University

Dr. Haruto Akira Liang, Nagoya University

Lecturer, Nagoya University

References

Analia, D., Syaukat, Y., Fauzi, A., & Rustiadi, E. (2020). The Impact of Social Capital on the Performance of Small Micro Enterprises. Jurnal Ekonomi Malaysia, 54(1), 81-96. https://doi.org/10.17576/JEM-2020-5401-6

Babar, S. F. (2021). Financial institutions and Chinese investment: The review of China Pakistan economic corridor (CPEC) policy.

Banik, S. (2018). Small scale enterprises in India: opportunities and challenges.

Bosman, L., Hartman, N., & Sutherland, J. (2019). How manufacturing firm characteristics can influence decision making for investing in Industry 4.0 technologies. Journal of Manufacturing Technology Management 4(2), 16-21. https://doi.org/10.1108/JMTM-09-2018-0283

Chih, S. H., Liang, L. W., & Huang, B. Y. (2018). The study on the relationship between bank M&A, SME lending, credit guarantee and bank efficiency. Romanian Journal of Economic Forecasting, 21(2), 95-117.

Ghose, M. K., & Roy, S. (2020). Contribution of small-scale mining to employment, growth and sustainability–an Indian scenario. Environment, Growth and Sustainability, 9(3), 283-303.

Godke Veiga, M., & McCahery, J. A. (2019). The financing of small and medium-sized enterprises: an analysis of the financing gap in Brazil. European Business Organization Law Review, 20(4), 633-664. https://doi.org/10.1007/s10668-006-9024-9

Haraguchi, N., Martorano, B., & Sanfilippo, M. (2019). What factors drive successful industrialization? Evidence and implications for developing countries. Structural Change and Economic Dynamics, 4(9), 266-276. https://doi.org/10.1016/j.strueco.2018.11.002

Haralayya, D., & Aithal, P. S. (2021). Study on Productive Efficiency of Financial Institutions. International Journal of Innovative Research in Technology (IJIRT), 8(1), 159-16. https://doi.org/10.2139/ssrn.3860891

Iwara, I. O., & Netshandama, V. O. (2021). Small-enterprise capital mobilization and marketing in rural areas: A review synthesis of Stokvel model. Finance Journal, 27(2), 1-11.

Karpova, E., Kunz, G. I., & Garner, M. B. (2021). Going global: The textile and apparel industry. Bloomsbury Publishing USA. https://doi.org/10.5040/9781501338700

Khan, O., Daddi, T., & Iraldo, F. (2020). Microfoundations of dynamic capabilities: Insights from circular economy business cases. Business Strategy and the Environment, 29(3), 1479-1493. https://doi.org/10.1002/bse.2447

Kumar, K., & Prakash, A. (2018). Developing a framework for assessing sustainable banking performance of the Indian banking sector. Social Responsibility Journal, 15(5), 689-709. https://doi.org/10.1108/SRJ-07-2018-0162

Lu, Z., Wu, J., Li, H., & Nguyen, D. K. (2022). Local bank, digital financial inclusion and SME financing constraints: Empirical evidence from China. Emerging Markets Finance and Trade, 58(6), 1712-1725. https://doi.org/10.1080/1540496X.2021.1923477

Ozili, P. K. (2021, October). Financial inclusion research around the world: A review. In Forum for social economics (Vol. 50, No. 4, pp. 457-479). Routledge. https://doi.org/10.1080/07360932.2020.1715238

Shafi, M., Liu, J., & Ren, W. (2020). Impact of COVID-19 pandemic on micro, small, and medium-sized Enterprises operating in Pakistan. Research in Globalization, 2, 100018. https://doi.org/10.1016/j.resglo.2020.100018

Suh, J. B., Nicolaides, R., & Trafford, R. (2019). The effects of reducing opportunity and fraud risk factors on the occurrence of occupational fraud in financial institutions. International Journal of Law, Crime and Justice, 5(6), 79-88. https://doi.org/10.1016/j.ijlcj.2019.01.002

Taskinsoy, J. (2018). Effects of Basel III Higher Capital and Liquidity Requirements on Banking Sectors across the Main South East Asian Nations. Available at SSRN 3275003. https://doi.org/10.2139/ssrn.3275003

Ughetto, E., Cowling, M., & Lee, N. (2019). Regional and spatial issues in the financing of small and medium-sized enterprises and new ventures. Regional Studies, 53(5), 617-619. https://doi.org/10.1080/00343404.2019.1601174

Yoshino, N., & Taghizadeh-Hesary, F. (2019). Optimal credit guarantee ratio for small and medium-sized enterprises’ financing: Evidence from Asia. Economic Analysis and Policy, 62, 342-356. https://doi.org/10.1016/j.eap.2018.09.011

Zuo, J. (2022, April). Reflections on Chinese Economic Growth in the Post-epidemic Era via Analysis of Argentina’s Debt Crisis and Japanese Bubble Economic Crisis. In 2022 7th International Conference on Social Sciences and Economic Growth (ICSSED 2022) (pp. 534-544). Atlantis Press. https://doi.org/10.2991/aebmr.k.220405.088
Published
2022-06-30
How to Cite
Prakash , A. Y., & Liang, H. A. (2022). Role of Financial Institutions on Growth of Small and Medium Enterprises in Japan. Journal of Finance and Accounting, 6(3), 11 - 20. https://doi.org/10.53819/81018102t5082
Section
Articles