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Prospects for Regional Financial Institutions to Enhance Their Roles Through Hometown Tax Donation—Current State of Lending by Regional Financial Institutions and of Intra-regional Industry-Government-Banking Collaboration

In: Local Tax Benefits at a Distance

Author

Listed:
  • Takaaki Hoda

    (Kobe University)

  • Richard B. Dasher

    (Stanford University)

Abstract

Similar to the relationship between crowdfunding and regional financial institutions as presented in Chap. 3 , collaboration with regional financial institutions is also essential in regional revitalization triggered by the Hometown Tax Donation gift market. As local businesses scale up, as introduced in Chaps. 3 and 4 , they will need working capital and funds for capital investment. As such, expansion of local businesses driven by Hometown Tax Donation offers regional financial institutions an opportunity to increase lending. Financial institutions across Japan and most notably in rural areas face the challenge of raising loan-to-deposit ratio. Meanwhile, if loans are extended to businesses that simply exploit the special demand from Hometown Tax Donation without enhancing capabilities or skills, there will be risk of loan default once the system is terminated. Thus, rigorous screening is required. Yet, with backup in financing by financial institutions, the gift market should be able to drive regional economic revitalization.

Suggested Citation

  • Takaaki Hoda & Richard B. Dasher, 2021. "Prospects for Regional Financial Institutions to Enhance Their Roles Through Hometown Tax Donation—Current State of Lending by Regional Financial Institutions and of Intra-regional Industry-Government," SpringerBriefs in Economics, in: Local Tax Benefits at a Distance, chapter 0, pages 53-65, Springer.
    • Handle: RePEc:spr:spbchp:978-981-16-5138-0_5
    DOI: 10.1007/978-981-16-5138-0_5
    as

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