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Japan Throws $16.7B Lifeline

The bailout aims to help smaller business outside of banking or corporate sectors

By Clay Dillow, Newser Staff

Posted Jan 27, 2009 7:03 AM CST

(Newser) – Following in the footsteps of America and Europe, Japan is offering $16.7 billion to companies threatened by the financial crisis, moving outside the banking sector to take equity stakes in smaller companies that otherwise can't find financing, the Financial Times reports. The 1.5 trillion yen package aims to stave off bankruptcies, which jumped 24% in December over a year earlier and claimed 33 listed firms last year.

Japan’s smaller firms employ 70% of its workforce and supply many larger companies, like Honda Motor Corp., with necessary parts and products. The new lifeline joins ongoing efforts by the Bank of Japan to buy corporate debt from lenders to ease the strain on credit markets and aid larger companies, as well as a controversial plan to distribute $22.3 billion to individuals.

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Testing of the walking assist device with bodyweight support system at Honda's Saitama Factory in Japan. (Photo: Business Wire)

Electricians walk by a Tokyo brokerage's electronic board indicating Japan's benchmark Nikkei 225 stock average soared 378.93 points, or 4.93%, to 8,061.07 Tuesday, Jan. 27, 2009. (AP Photo/Koji Sasahara)

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We want to support companies that we think are important for Japan and for regional economies, regardless of their size.
- Toshihiro Nikai, Japanese economy, trade and industry minister

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Japan Throws $16.7B Lifeline