In Korea, households' net saving rate has been decreasing for more than a decade, reaching 4.8% in 2004. However, during the same period, expenditures
on education as a percentage of household income have increased rapidly to more than 10%. This indicates the possibility that increased human capital investment has contributed to the decline of net saving rate, eroding the basis of households' financial asset holdings.
Analyses using a continuous-time overlapping generations model, taking into account both human capital and financial assets, show that increased college premium together with decreased birth and death rates brought about the dramatic reversal of the two different investment rates; increased human capital investment and decreased financial investment.
Such changes in households' overall asset portfolio also imply that financial markets now face more credit constraints than before, since it is harder for future human capital to serve as collateral for loans to fulfill increased demand for human capital investments. This is basically due to the fact that the value of borrowers' future human capital is subject to informational asymmetries and
the loans against human capital are usually long-term ones.
Therefore, financial infrastructure such as an information network of interested parties (financial companies, schools, the government, credit bureau, and employers) and markets for human capital-backed securities should be fostered to solve the problems related to human capital finance.
인적자본에 대한 투자 증가가 금융시장에 미치는 영향(Increasing human capital investment and its impact on financial markets)
|Series Title; No||금융조사보고서 / 2006-04|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy
|Holding||한국금융연구원; KDI 국제정책대학원|