Korea’s financial regulator has set out to make an in-depth investigation on consumer debt. Since June of last year, the Financial Services Commission has announced a series of policy measures to rein in the rising level of consumer debt. Now that the regulator reckons the measures somehow took effect in holding back the household debt level, it wants to head off any inkling of household debt rising to a dangerous level by performing a microeconomic analysis on debt qualities of “vulnerable debtors” such as those taking out multiple loans and self-employed small business proprietors.
Koh Seung-Beom, the financial policy bureau chief at the Financial Services Commission, said at a regular briefing session on June 1, “Even though we have witnessed declining consumer debt levels and improving loan structures since early this year, there are troublesome signs that the debt’s quality has deteriorated, as can be seen in the rising numbers of borrowers who took out loans from many different financial institutions and those self-employed whose business conditions are worsening. We at the commission decided to look into this matter in detail in order to respond to any future problems.”
To that end, the commission has run a task force team of credit analysts to scrutinize the household debt problem since April. The team focuses on 12 analysis themes including an evaluation of the ability to repay by income level and age group, default risk assessment on small business loans, and default risk analysis on multiple loan takers.
As of the end of the first quarter, the balance of household credit (household loans plus sales credit) has been 911.4 trillion won, 530 billion won lower than the end of 2011. It was because of the reduction of sales credit (buying on credit) by 1,170 billion won although the household loan level rose 640 billion won. The balance of household credit contracted for the first time since the first quarter of firstname.lastname@example.org