In this file photo, taken on Sept. 16, 2019, customers are seen holding consultations for loans at a bank in Seoul. (Yonhap)
SEOUL, July 15 (Korea Bizwire) — The value of loans issued to young South Koreans from the non-banking financial sector is on the rise, with some being pushed into declaring bankruptcy.
Rep. Jin Sun-mee of the Democratic Party shared a report from the Financial Supervisory Service that showed young South Koreans under the age of 29 borrowed a total of 26.5 trillion won (US$20 billion) from the non-banking financial sector last year, which was 17.5 percent more than the previous year.
Compared with the 11.2-percent increase in borrowing from banking sectors during the same period, the increase is significant.
Tighter restrictions on borrowing from the banking sector as well as relatively lower incomes and a lack of credit history among young South Koreans have pushed them to turn to the non-banking financial sector for loans.
With the growing amount of loans, the number of bankruptcies has also jumped. A total of 5,241 people in their 20s declared bankruptcy between January and May of this year.
An average of 1,048 people declared bankruptcy each month, up from 992 last year.
There are also more people in their 20s going through debt settlement.
The Credit Counseling and Recovery Service reported that their numbers have gone up from 11,087 people in 2019 to 12,780 in 2020 and 13,078 in 2021.
The Seoul Welfare Foundation conducted a survey of 512 people in their 20s who had declared bankruptcy at the Seoul Bankruptcy Court, 43 percent of whom said they borrowed money to cover their living expenses.
H. M. Kang (hmkang@koreabizwire.com)
