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Addressing high household debt in Korea

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  • Addressing high household debt in Korea
  • Jones, Randall S.; Kim, Myungkyoo
  • OECD Publishing


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Title Addressing high household debt in Korea
Similar Titles
Material Type Reports
Author(English)

Jones, Randall S.; Kim, Myungkyoo

Publisher

Paris, France : OECD Publishing

Date 2014-09
Series Title; No OECD Economics Department Working Papers / No. 1164
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Economic Conditions
Holding OECD
License

Abstract

Rising household debt has become a major policy concern in Korea. By the end of 2012, it had risen to 164% of disposable income, well above the OECD average of 133%. In addition to the economic impact and the risk to the financial sector, it raises social cohesion issues, as households with low income and credit ratings have limited access to financial markets and many are delinquent on their loans. It is essential to induce the soft-landing of household debt through a two-track approach: i) offering credit to households with low income and credit ratings and restructuring their debt, while limiting moral hazard and developing market-based lending; and ii) containing the risk caused by high household debt by strengthening prudential measures for financial institutions and improving mortgage lending by reducing the share of floating-rate and “bullet repayment” loans. This Working Paper relates to the 2014 OECD Economic Survey of Korea (www.oecd.org/eco/surveys/economic-survey-korea.htm)