Japanese bankruptcies surge amid financial crisis: Survey

TOKYO: The economic crisis claimed 1,429 companies in Japan in October, the most so far this year, a survey showed Tuesday.

Corporate bankruptcies soared 13.4 per cent from a year earlier as companies struggled to raise funds amid the global credit crunch.

"One factor behind the rising number of bankruptcy is that banks are reducing loans to companies," said Masashi Seki, an official at Tokyo Shoko Research which conducted the survey.

"Banks say that the number of companies meeting their lending criteria are declining, but from the borrowers' point of view, it's the banks that are refusing to lend money in difficult times," he said.

Corporate Japan has been a key driver of a recovery in Asia's biggest economy after the recessions of the 1990s.

Profits are now sliding as the country teeters on the verge of recession and exports suffer from the global economic slowdown.

Real estate firms and small companies in particular are feeling the strain but retailers and transport firms are also going bust.

The credit crunch came at an already tough time for transport firms and manufacturers feel the pain from surging raw materials costs, said Seki.

Usually about 60 percent of bankruptcies involve companies with five employees or less, but a growing number of medium-sized firms are also collapsing, the research showed.

Japanese Prime Minister Taro Aso announced late last month a new economic stimulus package worth almost 300 billion dollars, including measures to try to help small businesses cope with the economic downturn.