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Addressing High Household Debt in Korea


  • Randall S. Jones


  • Myungkyoo Kim



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 ( Comment faire face au fort endettement des ménages en Corée L’endettement croissant des ménages est l’un des grands sujets de préoccupation des pouvoirs publics en Corée. Fin 2012, il se montait à 164 % du revenu disponible des ménages, nettement au-dessus de la moyenne OCDE de 133 %. Outre ses conséquences économiques et les risques pour le secteur financier, il soulève des questions sur la cohésion sociale, car les ménages les plus modestes et les moins solvables n’ont guère accès au marché du crédit et leurs taux de défaillance sont élevés. Il convient de favoriser un retour ordonné à un niveau d’endettement plus faible pour les ménages en agissant sur deux leviers : i) en offrant des crédits aux ménages les plus modestes et les moins solvables et en restructurant leur dette, tout en limitant l’aléa moral et en développant le recours aux mécanismes du marché dans l’activité de prêt; et ii) en contenant le risque causé par l’endettement élevé des ménages par le renforcement des mesures prudentielles pour les institutions financières et en améliorant les prêts hypothécaires par la réduction de la part des prêts à taux variables ou à « remboursement in fine ». Ce Document de travail a trait à l’Étude économique de l’OCDE de la Corée, 2014 (

Suggested Citation

  • Randall S. Jones & Myungkyoo Kim, 2014. "Addressing High Household Debt in Korea," OECD Economics Department Working Papers 1164, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1164-en
    DOI: 10.1787/5jxx0558mfbv-en

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    Cited by:

    1. Christophe André, 2016. "Household debt in OECD countries: stylised facts and policy issues," Chapters from NBP Conference Publications, in: Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk (ed.), Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition, chapter 2, pages v1, 33-85, Narodowy Bank Polski, Economic Research Department.

    More about this item


    banks; banques; bullet loans; consumer finance companies; debt restructuring; delinquent borrowers; emprunteurs défaillants; endettement des ménages; faillite individuelle; Fond National du Bonheur; household debt; individual bankruptcy; individual workouts; Miso Finance; Miso Finance; mortgages; National Happiness Fund; New Hope Seed Loans; négociations individuelles; préts à remboursement in fine; prêts hypothécaires; restructuration des dettes; sociétés de crédit à la consommation; Sunshine Loans;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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