The study analyses the Korean payment guarantee system and aims to explore ways forward for the employment of payment guarantees to achieve efficient financing.
Payment guarantees mitigate information imbalances between debtors and creditors, assisting stable financing for companies and reducing debtors’ financing costs, as well as credit risks, facilitating the process of capital brokerage. However, indiscriminate employment of payment guarantees may make it easy for financially incapable companies to borrow against best practices, or may delay liquidation of insolvent corporations, which may cause chain bankruptcy. Moreover, it may cause other issues concerning transfer of wealth from guarantors to warrantees, as well as negatively impact the overall economy.
Nevertheless, banning payment guarantees may cause inefficiency in the financial market. Therefore, benefits of payment guarantees should be capitalized, while incentive structure of payment guarantees should be improved so as to prevent unfair transfers of wealth. Measures should be implemented so that unfair practices between guarantors and warrantees can be rectified, and regulations can be improved.
금융효율화를 위한 지급보증의 합리적 운용(Rational employment of payment guarantees for efficient financing)
|Series Title; No||정책연구시리즈 / 2000-03|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|