Japan’s Financial Exclusion Epidemic: Widespread Poverty and Limited Access to Banking Services

Tokyo, Japan - A staggering 51.5 million people in Japan are struggling to make ends meet, with a large wage gap between men and women, single mothers, and children with single parents being particularly affected. The country’s financial inclusion crisis is exacerbated by limited access to banking services, multiple debts, advanced age, illness, and lack of confidence in financial knowledge.

The Crisis

• Over half a million people are trapped in a “service vacuum” between existing loan and payment systems, unable to access mainstream financial services due to their income level.
• This demographic is often overlooked and lacks adequate support.

Complicating Factors

• Japan’s aging population: elderly individuals are more likely to experience financial difficulties due to illness or nursing needs.
• Foreign workers: earning low wages and struggling to access financial services due to limited residency registration and length of stay requirements.

Consequences

• Relative poverty rate in children has been on the rise, particularly among those with single parents.
• Youth unemployment remains a significant concern.
• Limited ability to open bank accounts exacerbates the problem.

Challenges

• Decreasing household savings rate: making it increasingly difficult for individuals to borrow money and access financial services.
• Growing numbers of people turning to public assistance programs: over 30% of recipients are women.

Government Initiatives

• Public Loan System for Livelihood Support: an initiative aimed at addressing the issue of financial exclusion.
• MetLife Foundation’s three-pillar approach: access to services, knowledge, and insights offers a promising framework for advancing financial inclusion in Japan.

Urgent Action Needed

• Without urgent action to address the root causes of financial exclusion, Japan risks further entrenching poverty and limiting its economic growth potential.