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Financial experts saying the risk of household debt to be realized within 1-3 years

NSP NEWS AGENCY, By Eun-young Huh and Soo-in Kang, 2023-05-04 11:47 ENX7
#risk factors #financial system

(Seoul=NSP NEWS) = Over half of the 76 domestic and foreign financial and economic experts have responded high level of household debt, rising repayment burdens, and possible bank run are considered the major risk factors in the Korean financial system. Among them, the risk of household debt is highly likely to become a reality in the medium term of 1-3 years.

On May 3rd, the Bank of Korea (BOK) released the '2023 H1 System Risk Survey Result,' which is a result of surveying the ideas of 76 financial and economic experts (from financial institution, research institution, universities, overseas IB, etc.) home and abroad on major risk factors and the possibilities in Korea's financial system from 5th to 17th last month.

This survey showed that the experts indentified the high level of household debts and growing burdens of debt repayment (53.9%), stagnant real estate market (48.7%), financial institutions' loan defaults and contingent liabilities and possibility of large-scale fund withdrawals (43.4%) are the major internal risk factors in the Korean financial system, while citing prolonged US fiscal austerity (28.9%) as an external risk factor.


In terms of the time frame of each risk factors, corporate default risks, financial institution's loan defaults, domestic financial and foreign exchange market volatility, current account deficits and real estate market stagnation - except for household debt - are expected to occur in the short term (within a year). On the other hand, the risks related to household debts were reported to be realied in the medium term (1-3 years).

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