DP2017-28

How Do Accounting and Legal Experts View
the Role of Regional Financial Institutionsin Supporting SMEs?
­Based on a 2016 Questionnaire Study of
Accounting and Legal Experts­
Nobuyoshi YAMORI
Koji YONEDA

October 25, 2017

How Do Accounting and Legal Experts View the Role ofRegional Financial Institutions in Supporting SMEs?*-Based on a 2016 Questionnaire Study of Accounting and Legal ExpertsNobuyoshi Yamori, Professor,
Research Institute for Economics and Business Administration, Kobe University&
Koji Yoneda,
Assistant Professor, Faculty of Economics, Kumamoto Gakuen University

Abstract
In February 2016 we administered a questionnaire to 700 tax accountants, certified accountants
and lawyers, and conducted a study of the actual state of regional revitalization efforts by experts
and the issues they faced. In this paper, we use some of the results of this study to analyze theactual state of collaborations between regional financial institutions and accounting/legal experts,
and the issues they face, with respect to providing support to regional SMEs (small andmedium-sized enterprises). Efforts by regional financial institutions are not always fully visible
to experts, and collaboration between experts and regional financial institutions is still developing.
In the future, deepened mutual understanding through greater regular contact between them will
be important for increasing support capabilities for regional SMEs.

Keywords
SME support, region-based relationship banking, regional finance, experts, questionnaire*This paper is based on Yamori and Yoneda (2016b). This paper was financially supported by

JSPS Grants-in-Aid for Scientific Research (15H03366, 16H02027, and 17H02533).
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1. Introduction
The “Japanese Financial Industry: Desirable Medium- and Long-Term State (Present State andFuture Outlook)” report, published in May 2012 by the Financial System Council, states that,“Most local companies are confronted with the shrinking of their home markets and the reductionof their sales. In addition to the difficulty in short-term financing, they are faced with thelong-term problem of sluggish performance occurring as their competitiveness tends to decline.
Already, it is no longer good enough just to supply funds.” It asserts that in providing support toenterprises, “As well as improving the ability to collect and analyze information, utilizing outside
experts will be beneficial for financial institutions.”
The “Financial Monitoring Policy” published by the Financial Services Agency in September
2014 also indicates the following as an important supervisory perspective: “Specific initiatives
for effectively providing the appropriate consulting services to corporate customers not only froma financial aspect but also from the aspect of the various management issues such as revenue
expansion and business succession, including the utilization of outside experts with the capability
to support the main business of the corporate customer.” The supervisory authorities also call on
regional financial institutions to “when necessary and appropriate, use outside experts (taxaccountants, lawyers, certified accountants, small and medium enterprise management
consultants, business advisors, etc.) while maintaining a focus on supplementing their own
shortfalls in expert personnel and expertise and engaging in medium- and long-term personnel
development and expertise accumulation.”
Referring to government policies such as these, Yamori (2016) introduced examples of SME
support collaborations between regional financial institutions and experts, and emphasized theimportance of collaboration. However, the reality is that not as much collaboration progress has
been made as hoped. For example, according to the Financial Services Agency’s August 2015
“Results of Questionnaire Concerning the Evaluations by Users, etc., of the Region-Based
Relationship Banking Efforts by Regional Financial Institutions, etc.,” only 11.3% of users
evaluated regional financial institutions’ “stances towards coordination with outside experts,
outside institutions, and the like” as “proactive,” and even together with the 28.1% that evaluatedthem as “somewhat proactive,” the total percentage remained below 40%. The total percentage ofstudy participants that answered “proactive” or “somewhat proactive” rose 6.0% compared to
two years ago, but the number of respondents indicating some degree of proactiveness is still lessthan half.
One reason for this is that, as Yamori and Yoneda (2015 a, b) made clear based on2questionnaires administered to financial institution staff, regional financial institution staff
consider experts to have insufficient abilities. Company support measures drafted by experts are
not always highly evaluated by financial institutions, and if financial institutions continue having
to rebuild them from scratch, it is clear that collaboration work will not make progress. Yamori
and Yoneda (2015a, b) investigated issues involved in collaboration between financial institutions
and experts from the position of financial institution staff, but this paper looks at issues involvedin collaboration between financial institutions and experts from the opposite standpoint, that ofexperts.

2. Overview of Survey Implementation
This survey was conducted online using the Rakuten Research service. Specifically, an email
requesting survey responses was sent to 10,000 registered Rakuten study panel registrants (+ 200
partner company panel members) on February 4, 2016. Potential respondents answered screening
questions, and those who met the following conditions answered the actual survey’s questions.
Responses were received from the expected number of respondents, 700 people, on February 15,
and the survey was concluded.
The survey was only administered to respondents who were tax accountants, certified
accountants, and/or lawyers. Of the 700 respondents, 466 were tax accountants (66.6%), 202
were certified accountants (28.9%) and 142 were lawyers (20.3%). These total to 810 people dueto the presence of respondents holding two or more qualifications.
With regard to use of qualifications by respondents, 403 (57.6%) responded that they had“opened practice as qualification holders (including joint business owners) and 297 (42.4%)
responded that they were “working in an office or company as a qualification holder, engaging inwork related to said qualification (e.g. accounting offices, legal offices),” with the former slightly
outnumbering the latter.
This paper only used responses related to collaboration with financial institutions. For detailed
questionnaire results, please see Yamori and Yoneda (2016).

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3. Status of Collaboration between Financial Institutions and Experts(1) Experience with formulation of business improvement plans and business turnaroundplans in collaboration with financial institutions
The survey asked respondents about their experience with formulating business improvement
plans and business turnaround plans in collaboration with financial institutions. 371 (53.0%) of
the respondents answered that they had “never formulated plans”, 167 (23.9%) answered thatthey had formulated “1 to 9 plans”, 87 (12.4%) answered that they had formulated “10 to 29
plans”, 52 (7.4%) answered that they had formulated “30 or more plans” and 23 (3.3%) answered“I don’t know”. Thus, the fact that he or she is an accounting or legal expert does not necessarilymean they have extensive experience with formulating business plans in collaboration withfinancial institutions.
This survey also asked if respondents had received qualifications as business supporting
institutions for assisting business innovation authorized by the government. The results for the
217 respondents who indicated they had received qualifications were as follows: 35.5% of the
respondents answered that they had “never formulated plans”, 30.0% answered that they had
formulated “1 to 9 plans”, 18.9% answered that they had formulated “10 to 29 plans”, 14.3%
answered that they had formulated “30 or more plans” and 1.4% answered “I don’t know”. Evenfor the certified support institutions, one in three experts had no experience with collaborativeplan formulation.

(2) Future stances towards coordination with financial institutions
One of the survey’s questions was “What do you or the office you work for think about future
support activities for SMEs?”. One of the possible answers was “I/we would like to build a
network/strengthen our network with financial institutions”. 89 respondents (12.7%) selected thisanswer.
Breaking down the respondents by the professional qualifications, 13.1% of tax accountants,
16.8% of certified accountants and 8.5% of lawyers indicated that they wished to build or
strengthen networks with financial institutions. This shows that lawyers were relatively
undisposed to collaborating with financial institutions, while accountants were the most disposedto these collaborations. However, looking purely at responses for experts in certified support
institutions, the gaps in percentages were minor, with 20.8% of tax accountants, 22.0% of
certified accountants and 18.8% of lawyers indicating they wished to build or strengthen
networks with financial institutions.
4(3) Status of day-to-day interaction with financial institutions
This survey asked, “Do you know who the contact person or branch managers are at the mainbanks of your main clients? Consider typical client cases when responding.”. This question's aim
was to investigate the status of day-to-day interaction between experts and financial institution
staff.
Table 1 shows the responses to this question. With regard to familiarity with contact person inclients’ main banks, the most common answer was “I don’t know them” at 37.1%, followed by “Iknow them” at 28.6%, “I don’t know their names, but I can contact them when necessary” at
20.4%, and “I cannot easily contact them” at 13.9%. With regard to familiarity with branchmanagers in clients’ main banks, the most common answer was “I don’t know them” at 40.0%,
followed by “I know them” at 21.4%, “I don’t know their names, but I can contact them whennecessary” at 19.6%, and “I cannot easily contact them” at 19.0%. This indicates that experts do
not maintain sufficient day-to-day contact with the contact person and branch managers at thefinancial institutions of their main clients.
Looking at the percentages of each qualification category of respondents that replied that theyknew the contact person, for tax accountants it was 31.3%, for certified accountants, 36.6% andfor lawyers, 27.5%. The percentages of those that replied that they knew the branch managers
were, for tax accountants, 24.0%, for certified accountants, 27.2% and for lawyers, 21.8%. The
order, from greatest to least, was certified accountants, tax accountants and lawyers.

Table 1 Familiarity with contact persons and branch managers of clients’ main banks
I don’t know them

I cannot easily contactthem

I don’t know their names,
but I can contact themwhen necessary

Branch managers

I know themObservation number

Contact persons

700

200

143

97

260

100.0

28.6

20.4

13.9

37.1

700

150

137

133

280

100.0

21.4

19.6

19.0

40.0

(Note) The top figure indicates the number of people, and the bottom number indicates thepercentage.
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(4) Introductions of clients to/by financial institutions
As one indicator of relationships with financial institutions, we asked about introductions ofclients. Table 2 shows the results. When asked how often financial institutions introduced clientsto them, 44.8% of tax accountants replied “Never,” as did 41.5% of lawyers, but only 23.3% ofcertified accountants. When asked how often they introduced clients to financial institutions,
41.2% of tax accountants replied “Never,” as did 46.5% of lawyers, but only 27.7% of certified
accountants.
This shows that of the three professions, certified accountants and financial institutions
coordinate the most closely.

Table 2 Introductions of clients to/by financial institutions
Introductions of clients by financial
institutions

Introductions of clients to financial
institutions

Often

Sometimes

RarelyNever

I don’t know

Often

Sometimes

RarelyNever

I don’t knowTaxaccountants

8.6%

18.2%

21.5%

44.8%

6.9%

6.7%

19.5%

25.3%

41.2%

7.3%

Certifiedaccountants

19.3%

22.8%

22.8%

23.3%

11.9%

14.4%

19.3%

25.7%

27.7%

12.9%

Lawyers

16.2%

14.8%

19.0%

41.5%

8.5%

11.3%

14.8%

17.6%

46.5%

9.9%

(5) Capabilities of financial institution staff as seen by experts
Financial institution staff members are required to possess business support capabilities, butwhat is the level of these capabilities in the opinions of experts? We inquired about this in thesurvey with the following question: “We would now like to ask about the client liaison personnel
in the main banks of your SME clients. What percentage of these personnel do you believe arecapable of providing accurate advice to SMEs?” The responses are shown in Table 3.
1.9% of respondents indicated that “80% to 100%” of the staff were capable of providing
accurate advice, 11.1% replied “60% to 79%”, 22.1% replied “40% to 59%”, 18.3% replied“20% to 39%”, 17.7% replied “Less than 20%” and 28.9% replied “I don’t know.” There were6

almost no experts who indicated they believed 80% or more were capable of providing accurate
advice, while there were almost 20% (including those responding “I don’t know” whencalculating percentages) who gave the harsh evaluation that less than 20% could provide accurate
advice.
In order to make it simpler to compare results, we calculated the average score by type of
qualification holder, counting those who responded “80% to 100%” as 90%, “60% to 79%” as70%, “40% to 59%” as 50%, “20% to 39%” as 30% and “Less than 20%” as 10%, anddisregarding “I don’t know” responses. This produced the following average scores: for tax
accountants, 28.8%, for certified accountants, 34.0% and for lawyers, 27.2%. There were no
major differences by qualification type, with evaluations low across the board.
However, as indicated earlier, there is little day-to-day interaction between experts andfinancial institutions, so it is possible that respondents do not have a clear understanding of actual
conditions. We therefore examined the potential of evaluations differing depending on theamount of day-to-day interaction. Again, we counted those who responded “80% to 100%” as90%, “60% to 79%” as 70%, “40% to 59%” as 50%, “20% to 39%” as 30% and “Less than 20%”
as 10%, and disregarded “I don’t know” responses, and we separated respondents into fourgroups, based on their level of interaction with the main contact persons for their main clients (“Iknow them”, “I don’t know their names, but I can contact them when necessary”, “I cannot easily
contact them” and “I don’t know them”) and determined the average scores for each group.
The average score for those who responded “I know them” was 42.9%, followed by 32.7% for
those who responded “I don’t know their names, but I can contact them when necessary”, 27.3%
for those who responded “I cannot easily contact them” and 13.7% for those who responded “I
don’t know them”. This shows that experts who interact with financial institution staff on a
day-to-day basis tend to evaluate their capabilities more highly.
With regard to problem recognition, as well, we evaluated capabilities based on experience
with formulation of business improvement plans and business turnaround plans in collaboration
with financial institutions, as indicated in (1). Calculations using the same representative values
gave percentages of 50.0% for respondents answering that they had formulated “30 or more plans”
and 52.5% for those answering “10 to 29 plans”.

Experts with extensive experiencecollaborating with financial institutions on business turnaround plans, etc., evaluated thecapabilities of financial institution staff highly. For those answering “1 to 9 plans”, the percentage
was just 36.3%, and for those answering that they had “never formulated plans”, the percentage
was just 33.3%.
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These results indicate that in addition to the possibility that financial institution staff have low
capabilities, it is also possible that many experts lack sufficient knowledge of the capabilities offinancial institution staff, and that regular interaction between financial institutions and experts
could increase the mutual trust between them and promote greater support for SMEs.

Table 3 Percentage of financial institution staff considered capable of providing accurate
advice to SMEs
I don’t know

20% to 39%

Less than
20%

40% to 59%

60% to 79%

80% to 100%

Observation
numberOverall

700

13

78

155

128

124

202

100.0

1.9

11.1

22.1

18.3

17.7

28.9

(Note) The top figure indicates the number of people, and the bottom number indicates thepercentage.

(6) Impediments to collaboration with financial institutions in providing support tobusinesses
This survey asked respondents to “Select all of the impediments you have encountered throughyour collaborations with the main banks of clients during the course of providing support toclients”.
Table 4 shows the results. Looking at all responses, the impediments most often encounteredduring collaboration with clients’ main banks were “Coordination is difficult because multiple
financial institutions are involved” and “The amount of enthusiasm regarding support varies
within financial institutions from branch to branch and from staff member to staff member,” eachwith 22.1%, followed by “Financial institutions are slow to make decisions” with 15.7%. Many
respondents also pointed out problems on the financial institution side, with 13.6% answering“Financial institutions are not proactive when it comes to providing support to businesses” and“The level of ability of the staff at the financial institutions is low”. There were also answers
pointing out problems on the expert side, such as “I/we feel distrust for financial institutions”(14.0%) and “I/we lack knowledge regarding finance” (11.7%). Almost all experts indicated thatthey experienced some sort of problems in their collaborations, with only 2.0% responding,“There are opportunities for collaborations, and I/we have not experienced any impediments.”
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Table 4 contains response results (showing ratios only) for each of the three qualification
categories. There were large differences in the percentages of respondents for the following
answers: “I/we feel distrust for financial institutions”, “The amount of enthusiasm regarding
support varies within financial institutions from branch to branch and from staff member to staff
member” and “The level of ability of the staff at the financial institutions is low”, with a large
percentage of tax accountants selecting these answers, while a small percentage of lawyers
selected them. Tax accountants overall felt a greater amount of impediments lay with thefinancial institutions.

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Table 4 Impediments experienced when collaborating with clients’ main banks (multiple
answers allowed)
Overall

I/we lack knowledge regarding
finance
It isn’t clear which financial
institutions are the clients’ mainbanks
Coordination is difficult because
multiple financial institutions are
involved
I/we feel distrust for financial
institutions
Financial institutions feel distrust
towards me/us
The amount of enthusiasm
regarding support varies within
financial institutions from branch tobranch and from staff member tostaff member
Financial institutions are notproactive when it comes toproviding support to businesses
The level of ability of the staff at
the financial institutions is low
It is difficult to determine who is incharge and who has
decision-making authority atfinancial institutions
Financial institutions are slow tomake decisions
Progress is difficult when credit
guarantee associations become
involved
I/we have experienced major
impediments not listed above
There are no opportunities forcollaborations, so I/we have notexperienced any impediments
There are opportunities forcollaborations, and I/we have notexperienced any impediments
None of the above apply
I don’t knowTaxaccountants

Certifiedaccountants

Lawyers

Ratio

Ratio

Ratio

Number of
respondents

Ratio

82

11.7%

11.8%

11.9%

13.4%

78

11.1%

11.6%

17.3%

12.0%

155

22.1%

22.1%

25.2%

22.5%

98

14.0%

17.4%

13.4%

8.5%

36

5.1%

5.2%

9.4%

4.9%

155

22.1%

26.6%

18.8%

16.2%

95

13.6%

15.7%

13.9%

10.6%

95

13.6%

16.3%

12.4%

8.5%

48

6.9%

8.2%

7.9%

7.0%

110

15.7%

16.7%

17.8%

14.8%

60

8.6%

9.2%

8.4%

12.0%

14

2.0%

2.1%

5.0%

2.8%

49

7.0%

6.9%

6.9%

7.0%

14

2.0%

2.6%

2.0%

1.4%

75
119

10.7%
17.0%

9.2%
15.2%

10.9%
14.9%

14.8%
17.6%

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(7) Stance towards client support efforts, etc., by the most important financial institution in
the region
This survey investigated which financial institutions played central roles within their regions.
Because many of the respondents are located in central urban areas, responses regarding thebusiness categories of financial institutions playing central roles in regions were as follows:“Major city or trust banks” 37.1%, “Regional banks/second-tier regional banks” 33.0%, “Credit
associations/credit cooperatives” 22.7%, “Other” 2.9%, “JA/fishery cooperatives” 2.3%,“Government-affiliated financial institutions” 2.0% 1.
Furthermore, this survey asked the following question: “Do you feel that the financial institutionthat plays a central role in the region where your office is located is passionate about supportingclient companies, collaborating with experts in order to support companies and engaging inregional revitalization?” Respondents chose one of the following five answers: “1. It is extremely
passionate”, “2. It is somewhat passionate”, “3. It is not very passionate”, “4. It is not passionate
at all” and “5. I don’t know.”
Table 5 shows the results. Looking at the results of responses regarding the stances of financial
institutions towards supporting client companies, 15.9% responded “It is extremely passionate”
and 38.6% responded “It is somewhat passionate”. Looking at the results of responses regarding
the stances of financial institutions towards collaborating with experts to provide support tocompanies, 11.7% responded “It is extremely passionate” and 31.7% responded “It is somewhat
passionate”. In terms of the stances of financial institutions towards engaging in regional
revitalization, the most popular answer, at 28.6%, was “It is not very passionate”, while only
8.9% of respondents selected “It is extremely passionate.” There are many financial institutions
which are passionate about providing support to client companies, but with regard to regional
revitalization efforts many respondents replied “I don’t know”, indicating that the efforts offinancial institutions are not clearly visible to experts.

1

Many respondents lived in central urban areas -- 198 respondents lived in Tokyo, 57 in Aichi

Prefecture, 53 in Osaka Prefecture and 48 in Kanagawa Prefecture.
11

Table 5 Stance towards client support efforts, etc., by the most important financial
institution in the region
It is extremely
passionate

It is somewhat
passionate

It is not very
passionate

It is not passionate
at all

700

111

270

127

36

156

100.0

15.9

38.6

18.1

5.1

22.3

Collaboration
with experts

700

82

222

190

43

163

100.0

11.7

31.7

27.1

6.1

23.3

700

62

164

200

78

196

100.0

8.9

23.4

28.6

11.1

28.0

Regional
revitalization

I don’t know

Observation
numberSupport for clientcompanies(Note) The top figure indicates the number of people, and the bottom number indicates thepercentage.

As seen earlier, the financial institutions pictured by respondents differed, so we decided to lookat the differences between financial institutions in different business categories. Here, we
calculated the average score, counting “It is extremely passionate” as +2 points, “It is somewhat
passionate” as +1 point, “It is not very passionate” as -1 point, “It is not passionate at all” as -2
points, and disregarding “I don’t know” responses.
Table 6 shows the results. All values are positive, indicating that overall the financial institutions
were seen as being passionate. Government-affiliated financial institutions had the highest scoresfor every category, though it must be noted that there were few experts who answered that thefinancial institutions in their region that played a central role were government-affiliated financial
institutions. Comparing the three most common business formats indicated by respondents -major city or trust banks, regional banks/second-tier regional banks and credit associations/credit
cooperatives, we investigate which was evaluated as being the most passionate about supportingclient companies and collaborating with experts. Surprisingly, major city or trust banks wererated the highest compared to other business categories for passion regarding regional
revitalization. This is likely because the members of the sample included many experts in major
cities such as those in Tokyo, Osaka or Aichi Prefecture, and in these regions major city or trustbanks work with local governments to provide region-based relationship banking.

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Table 6 Stance towards client support efforts, etc., by the most important financial
institution in the region: Average scores by business category
Government-affiliatedfinancial institutionsJA/fishery cooperatives

Credit associations/credit cooperatives

Regional banks/
second-tier regional
banks

Major city or trust
banks
Support for client companies

0.50

0.50

0.58

0.80

1.08

Collaboration with experts

0.43

0.40

0.47

0.46

1.08

Regional revitalization

0.41

0.31

0.35

0.62

0.92

(8) Changes in stance towards client support efforts, etc., by the most important financial
institution in the region
Next, we asked respondents the following question: “Over the past three years, have you seen
any changes in the stance towards client support, collaboration with experts in company support
or regional revitalization of the financial institution that plays a central role in the region where
your office is located?”
Table 7 shows the results. The most common response regarding changes in stances towards
support for client companies was “Unchanged” at 30.0%, followed by “I don’t know” at 28.6%,“Somewhat more proactive” at 20.1%, “More proactive” at 13.7%, “Somewhat less proactive” at
3.9% and “Less proactive” at 3.7%. The most common response regarding changes in stances
towards collaboration with experts to provide support for companies was “Unchanged” at 32.6%,
followed by “I don’t know” at 29.0%, “Somewhat more proactive” at 17.4%, “More proactive” at
9.9%, “Somewhat less proactive” at 6.4% and the least chosen answer, “Less proactive” at 4.7%.
The most common response regarding changes in the stances of financial institutions towards
regional revitalization was “I don’t know” at 32.3%, followed by “Unchanged” at 30.0%,“Somewhat more proactive” at 13.6%, “More proactive” and “Somewhat less proactive” both at
8.7% and “Less proactive” at 6.7%, a slightly different response pattern than the above twoquestions.
Next, we decided to look at differences on a business category basis. Here, we calculated theaverage score, counting “More proactive” as 2 points, “Somewhat more proactive” as 1 point,“Unchanged” as 0 points, “Somewhat less proactive” as -1 point, “Less proactive” as -2 points,
13

and disregarding “I don’t know” responses. Table 8 shows the results. Comparing the three mostcommon business categories among respondents -- major city or trust banks, regionalbanks/second-tier regional banks and credit associations/credit cooperatives -- we found thatmajor city or trust banks were evaluated as being more proactive with respect to supporting clientcompanies and regional revitalization, and regional banks/second-tier regional banks were
evaluated as being more proactive with respect to collaborating with experts.

Table 7 Changes in stances towards client support efforts, etc., by regional financial
institutions
I don’t know

Less proactive

Somewhat lessproactive

Unchanged

Somewhat moreproactive

More proactive

Observation
numberSupport for clientcompanies

700

96

141

210

27

26

200

100.0

13.7

20.1

30.0

3.9

3.7

28.6

Collaboration
with experts

700

69

122

228

45

33

203

100.0

9.9

17.4

32.6

6.4

4.7

29.0

Regional
revitalization

700

61

95

210

61

47

226

100.0

8.7

13.6

30.0

8.7

6.7

32.3

(Note) The top figure indicates the number of people, and the bottom number indicates thepercentage.

Table 8 Changes in stances towards client support efforts, etc., by regional financial
institutions: Average scores by business category
Government-affiliatedfinancial institutionsJA/fishery cooperatives

Credit associations/credit cooperatives

Regional banks/
second-tier regional
banks

Major city or trust
banks
Support for client companies

0.55

0.47

0.44

0.80

0.67

Collaboration with experts

0.37

0.43

0.35

0.80

0.67

Regional revitalization

0.39

0.36

0.32

0.92

0.90

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(9) Management culture of the most important financial institution in the region
One of the questions in the survey was “Select all of the following which apply to the
management culture of the financial institution that plays a central role in the region in whichyour office is located”. Table 9 shows the results.
Excluding “I don’t know” responses, the most frequently selected choice was “It is highlybureaucratic and lacks flexibility” (26.6%), followed by “It appears to have a demerit-based
personnel evaluation system” (15.3%) and “It does not sufficiently leverage its highly capable
personnel” (13.7%). These all are critical evaluations. Percentages for positive evaluations were
low, with the most frequently selected choice being “It has many highly capable staff members”(11.6%), followed by “The institution’s members take on new challenges” (8.3%), “There aremany staff members with consulting abilities” (7.4%), “It actively implements new financial
methods" (5.4%), “It actively supports struggling companies” (4.9%) and “It actively implements
regional revitalization measures” (4.7%).
Table 10 shows the results for the three business categories for which there were the most
respondents. For major city or trust banks, many respondents selected “It has many highly
capable staff members”, yet also “It appears to have a demerit-based personnel evaluation
system”. 2 For credit associations, on the other hand, many respondents stated that “It does not
sufficiently leverage its highly capable personnel”.

2

In the questionnaire administered to financial institution staff members introduced by Ito andYamori (2016), there were many answers indicating that credit association/credit cooperative
members had a greater propensity for using demerit-based personnel evaluation systems. This
discrepancy may be due to differences in outside impressions, but this survey asked about
financial institutions which played central roles in local regions, so the results could also be
indicative of polarization between credit association/credit cooperative measures (in other words,
there could be prominent differences between credit associations/credit cooperatives that engage
in leading efforts and those that do not).
15

Table 9 Management culture of regional financial institutions that play a central role
(multiple answers allowed)

Observation number

It appears to have a demerit-based
personnel evaluation system

It is highly bureaucratic and lacks
flexibility

It does not sufficiently leverage its
highly capable personnel

The institution’s members take on
new challenges

It actively implements new
financial methods

It actively supports struggling
companies

It actively implements regional
revitalization measures

It has many highly capable staff
members

There are many staff members with
consulting abilities

None of the above apply

I don’t know

700

107

186

96

58

38

34

33

81

52

80

235
100.0

15.3

26.6

13.7

8.3

5.4

4.9

4.7

11.6

7.4

11.4

33.6

Overall(Note) The top figure indicates the number of people, and the bottom number indicates thepercentage.

Table 10 Management culture of regional financial institutions that play a central role
(multiple answers allowed): Results by business category

It actively implements regional
revitalization measures

9.4% 16.3%

6.7%

8.5%

7.9% 15.9%

9.8% 16.5%

8.6%

6.7%

9.5% 12.4% 10.5% 19.0%
It has many highly capable staff
members

The institution’s members take on
new challenges
It does not sufficiently leverage its
highly capable personnel
It is highly bureaucratic and lacks
flexibility(Note) Ratios were calculated after excluding “I don’t know” responses.

None of the above apply

It actively supports struggling
companies

5.6% 23.8%

There are many staff memberswith consulting abilities

It actively implements new
financial methods

5.0%
It appears to have a demerit-based
personnel evaluation system

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8.8%

Major city or trust
32.5% 38.8% 22.5% 13.1%
banks
Regionalbanks/second・tier 22.6% 43.9% 16.5% 9.1%
regional banks
Creditassociations/credit 15.2% 43.8% 28.6% 14.3%
cooperatives

(10) Ideal stances of financial institutions as seen by experts
This survey included a question that presented respondents with eight statements regarding theideal stances of financial institutions and asked them to select all that they felt applied.
Table 11 shows the results. 36.1% selected “A financial institution’s mission is to support
companies that face management problems”. A previous study had regional financial institution
branch managers rate how strongly they agree or disagree with this exact same statement (1:Strongly agree, 2: Agree, 3: Somewhat agree, 4: Minimally agree, 5: Do not agree) (Yamori,
Tomimura, Takaku [2014]). 32.5% of branch managers answered “Strongly agree”. Together
with the 50.0% that answered “Agree,” over 80% actively agreed with the statement. Support for
struggling regional companies is considered the mission of regional financial institutions by boththe institutions themselves and by outside experts.
There are social demands for financial institutions to avoid excessive reliance on collateral andguarantees, and, actually, a high percentage of respondents (33.9%) stated that “Financial
institutions should reduce their reliance of collateral and guarantees”. This shows that experts
remain critical of financial institutions’ efforts in this area. 27.4% replied “Financial institutions
should take a more community-focused stance”, 26.7% replied “Financial institutions should takeresponsibility for the overall regional economy”, and 19.4% replied “Financial institutions should
coordinate more closely with outside institutions”. These high scores indicate that while regional
financial institutions are recognized as making efforts in these areas, major issues still remain.
Table 11 also shows the results for this question, broken down by each qualification category.
Answer selection ratios differed by area of expertise, with a relatively high number of tax
accountants selecting “Financial institutions should take a more community-focused stance”,
versus a relatively low number of lawyers. A relatively large number of certified accountants
selected “It is a financial institution's role to promote the rapid closing of financially troubled
companies,” while this statement received little support from lawyers.

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Table 11 Ideal stances of financial institutions (multiple answers allowed)
A financial institution’s mission is to support
companies that face management problems

It is a financial institution's role to promote therapid closing of financially troubled companies

Financial institutions should reduce their relianceof collateral and guarantees

Financial institutions should take responsibility forthe overall regional economy

Financial institutions should take a morecommunity-focused stance

Financial institutions should actively engage inbusiness consulting

Financial institutions should coordinate moreclosely with outside institutions

The credit-guarantee system is dulling thecompany support stances of financial institutions

None of the above apply

Overall

36.1%

16.1%

33.9%

26.7%

27.4%

16.1%

19.4%

14.7%

18.3%

Tax accountants
Certifiedaccountants

36.9%

17.2%

35.8%

28.1%

30.0%

15.2%

18.2%

17.4%

16.3%

34.2%

23.3%

32.7%

28.7%

27.7%

19.3%

22.3%

15.3%

14.9%

Lawyers

37.3%

16.2%

37.3%

25.4%

21.1%

17.6%

20.4%

9.9%

22.5%

4. Conclusions
This paper examined the actual state of collaborations between regional financial institutions
and experts, and the issues they face, with respect to providing support to regional SMEs, basedon the results of a questionnaire administered in February 2016 to a total of 700 participants (466
tax accountants, 202 certified accountants and 142 lawyers; the simple total is 810 people
because some respondents held multiple qualifications).
When asked whether they believed that regional financial institutions which played central
roles were passionate about (a) support for client companies, (b) collaboration with experts toprovide support for companies and (c) regional revitalization, 15.9% indicated that they felt theinstitutions were extremely passionate about (a) support for client companies, 11.7% indicatedthat they felt the institutions were extremely passionate about (b) collaboration with experts toprovide support for companies and only 8.9% indicated that they felt the institutions were
extremely passionate about (c) regional revitalization. It would be fair to say that efforts byfinancial institutions to take on the new challenge of regional revitalization are delayed compared
to client support.

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When asked whether they had encountered changes in the stances of regional financial
institutions which played central roles with regard to support for client companies, collaboration
with experts to provide support for companies and regional revitalization, 13.7% indicated thatthey felt the institutions were “more proactive” about (a) support for client companies, 9.9%
indicated that they felt the institutions were “more proactive” about (b) collaboration with experts
to provide support for companies and 8.7% indicated that they felt the institutions were “moreproactive” about (c) regional revitalization. There are hopes for accelerated regional revitalization
efforts by financial institutions, but there have been few changes prominent enough for experts torecognize.
The relationships between the contact persons/branch managers of client companies’ mainbanks and experts are an increasingly important aspect of providing support to client companies
through collaboration between financial institutions and experts. When asked about theirfamiliarity with contact persons and branch managers of clients’ main banks, 28.6% ofrespondents indicated that they knew the contact persons, and 21.4% indicated they knew the
branch managers.
When asked about the management culture of the financial institutions which played central
roles in their regions, respondents were often critical, with 26.6% answering “It is highlybureaucratic and lacks flexibility”, 15.3% answering “It appears to have a demerit-based
personnel evaluation system” and 13.7% answering “It does not sufficiently leverage its highly
capable personnel”.
When asked what percentage of the client liaison personnel in the main banks of SME clients
they believed are capable of providing accurate advice to SMEs, a mere 1.9% of respondents
answered “80% to 100%”. Even together with the 11.1% that answered “60% to 79%”, this still
only amounted to 13%. This indicates that among experts, sufficient trust has not been cultivatedtowards financial institution staff.
When asked what impediments they had experienced in their collaborations with the mainbanks of clients during the course of providing support to clients, the most common responses
were “Coordination is difficult because multiple financial institutions are involved” and “Theamount of enthusiasm regarding support varies within financial institutions from branch tobranch and from staff member to staff member” (22.1%). Many respondents also answered“Financial institutions are slow to make decisions” (15.7%), “Financial institutions are notproactive when it comes to providing support to businesses” (13.6%) and “The level of ability ofthe staff at the financial institutions is low” (13.6%). These are issues for which individual
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financial institutions can implement improvements, and, it would be fair to say, are pressing
issues for management.
There has been vigorous discussion regarding the necessity of collaboration between experts
and financial institutions, but few studies which gather direct feedback from those involved
regarding the current status of their collaborations and the issues they face. We believe this study
can provide invaluable information that can lead to greater collaboration. In the future, we would
like to use other questions to provide further advice that contributes to the advancement of
support for SMEs.

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