Scope of Maximum Interest Rate Regulations (Report of Workshops (1))

Kazutoshi Sugimura, Masaru Itatani and Masaki Bessho
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Kazutoshi Sugimura: Bank of Japan
Masaru Itatani: Bank of Japan
Masaki Bessho: Bank of Japan

No 17-E-1, Bank of Japan Research Laboratory Series from Bank of Japan

Abstract: Statutory provisions regulating maximum interest rates (referred to generally hereafter as "maximum interest rate regulations") employ words that are interpreted to include various payments to creditors such as "fees" in addition to "interest in substance" (i.e. "compensation for the use of principal"). Although this is considered effective in preventing evasion of regulation, it may have the effect of including payments made by parties to financial transactions without any intention to evade these regulations. The Report of the Workshops on "Contemporary Financial Transactions and Their Regulatory Treatment" (2016) (the "Report") explores this issue with regard to the interpretation of relevant laws and legislative actions. The Report refers to economics discourses related to maximum interest rate regulations and clarifies the intent and purpose of such regulations.

Keywords: Maximum interest rate regulations; Deemed Interest; Arrangement fees (search for similar items in EconPapers)
JEL-codes: D03 D18 E21 G02 K12 K22 K23 (search for similar items in EconPapers)
Date: 2017-03-08
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