This gives rise to worries that the effect might also have a harmful influence on consumption and Korea’s underlying macroeconomic stability. (image: Kobizmedia/Korea Bizwire)
SEOUL, May 2 (Korea Bizwire) – Although the surge in household debt has been slowing down, the burden on the financially disadvantaged has in fact increased.
Concerns are spreading about a ‘Balloon Effect’ as the economically disadvantaged are unable to easily obtain bank loans, and are therefore seeing their debt materialize as loans with onerous conditions. This gives rise to worries that the effect might also have a harmful influence on consumption and Korea’s underlying macroeconomic stability.
Young-Moo Jo, a researcher at the LG Economic Research Institute, suggested in a recent report entitled ‘Danger of Balloon Effect Increases for Household Debt of the Economically Disadvantaged Class’ that “the likelihood of the financially disadvantaged increasing their non-bank loans, new loans, and communal loans is growing.”
Jo analyzed Statistics Korea data on household financial assets and welfare data according to categories such as age, income brackets, employment work status and residence, as well as debt and income, repayment amounts, etc. over the past five years.
The conclusion of the analysis was that the situation for low-income earners has worsened much more than that of individuals in other income brackets. The number of financially disadvantaged individuals that cannot obtain new loans has increased as banking institutions have tightened their lending guidelines, and it can be concluded that individuals from this class that own a home are increasingly burdened by real estate loans.
By Lina Jang (lina@koreabizwire.com)
Burden of Debt Repayment Worsens for the Economically Disadvantaged
Although the surge in household debt has been slowing down, the burden on the financially disadvantaged has in fact increased.
Concerns are spreading about a ‘Balloon Effect’ as the economically disadvantaged are unable to easily obtain bank loans, and are therefore seeing their debt materialize as loans with onerous conditions. This gives rise to worries that the effect might also have a harmful influence on consumption and Korea’s underlying macroeconomic stability.
Young-Moo Jo[jm1] , a researcher at the LG Economic Research Institute, suggested in a recent report entitled ‘Danger of Balloon Effect Increases for Household Debt of the Economically Disadvantaged Class’ that “the likelihood of the financially disadvantaged increasing their non-bank loans, new loans, and communal loans is growing.” Jo analyzed Statistics Korea data on household financial assets and welfare data according to categories such as age, income brackets, employment work status and residence, as well as debt and income, repayment amounts, etc. over the past five years.
The conclusion of the analysis was that the situation for low-income earners has worsened much more than that of individuals in other income brackets. The number of financially disadvantaged individuals that cannot obtain new loans has increased as banking institutions have tightened their lending guidelines, and it can be concluded that individuals from this class that own a home are increasingly burdened by real estate loans.
[jm1]Not sure about this name, but Jo-young Moo sounds a bit funny for a Korean name. In English, the family name can come first or last (often first if that’s how it would be said in the person’s native language), but only first names can be hyphenated.
