Lending by Regional Financial Institutions Driven by Hometown Tax Donation and Ensuing Prospects for Intra-regional Industry-Government-Banking Collaboration

The purpose of this study is to reveal the current state of intra-regional lending by financial institutions prompted by Hometown Tax Donation, and to explore the ensuing prospects for intra-regional collaboration among businesses, governmental organizations and financial institutions. To achieve this end, we surveyed regional financial institutions across Japan, and found that although a significant number of financial institutions expect Hometown Tax Donation to promote industry-government-banking collaboration, few have actually extended loans, while many are taking a wait-and-see stance. The survey also revealed that while regional financial institutions recognize that Hometown Tax Donation can contribute to local businesses and economies, for example, through raising local businesses' incentives for new product development and enhancing their designing capabilities, or through "city marketing," they do not foresee a rise in migration/resettlement or lending. Meanwhile, it was revealed that most regional financial institutions that extended new or additional loans to gift providers?local businesses providing gifts in return for Hometown Tax Donations?had comprehensive partnerships with municipalities. Thus, for Hometown Tax Donation to contribute to regional development, collaboration between municipalities and financial institutions is essential, and the scheme itself should be enhanced so that it would gain the confidence of regional financial institutions.