Fascinating that despite years of "inflating or exaggerating [borrower] assets, incomes, and job titles” this bank maintained a delinquency rate less than a twentieth of the national average. In 2009, they had 4,399 mortgages and only 16 were in trouble.
In part it's because they were inflating/exaggerating legally recognized incomes (which were being systematically understated for the purpose of tax evasion), in a fashion which corrects the number towards a borrower's actual ability to repay the loan.
Part of me wonders whether in addition to the cultural factors counseling loan repayment whether some buyers did not have an actual, and possibly reasonable, fear of the bank taking extrajudicial measures to collect on debts. (i.e. "If you don't pay, we send thugs to beat up your family.") This is suggested as a standard enforcement mechanism for hui, which were known to be a common funding practice for the bank's borrowers, and those borrowers might naturally assume that the big, well-connected bank had levers stronger than sending a strongly worded letter in the event of default.
One imagines that the yakuza have a better repayment rate than borrower profiles would suggest, too, but that isn't primarily a consequence of their fluffy-bunny-community-involvement.
Comments
Fascinating that despite years of "inflating or exaggerating [borrower] assets, incomes, and job titles” this bank maintained a delinquency rate less than a twentieth of the national average. In 2009, they had 4,399 mortgages and only 16 were in trouble.
In part it's because they were inflating/exaggerating legally recognized incomes (which were being systematically understated for the purpose of tax evasion), in a fashion which corrects the number towards a borrower's actual ability to repay the loan.
Part of me wonders whether in addition to the cultural factors counseling loan repayment whether some buyers did not have an actual, and possibly reasonable, fear of the bank taking extrajudicial measures to collect on debts. (i.e. "If you don't pay, we send thugs to beat up your family.") This is suggested as a standard enforcement mechanism for hui, which were known to be a common funding practice for the bank's borrowers, and those borrowers might naturally assume that the big, well-connected bank had levers stronger than sending a strongly worded letter in the event of default.
One imagines that the yakuza have a better repayment rate than borrower profiles would suggest, too, but that isn't primarily a consequence of their fluffy-bunny-community-involvement.