August 13, 2021South Korea
South Korea looks to Fintech as household debt balloons to $1.6tn
South Korea’s household debt situation has become more pressing since the onset of the pandemic, with increases in borrowing for mortgages, to cover stagnating wages and to invest in the booming stock market. South Korean households are among the world’s most heavily indebted, with the average debt equal to 171.5 per cent of annual income.
In this context, Fintech has become an option for people who currently have household debt and P2P lenders are expected to help resolve the dichotomy in the credit market by increasing the access of low-income people to mid-interest loans.
Also, the proliferation of digital lenders and fintechs in South Korea, where higher-risk borrowers are often cut off from bank financing, has been encouraged by the country’s government. The government has attempted to address the danger by tightening lending rules. Regulators in July lowered the country’s maximum legal interest rate that private lenders can charge their customers from 24 to 20 per cent.
