Bankruptcy filings double compared to COVID-19 period, household debt and delinquency rates also up - Korea Economic Research Institute

The Korea Economic Research Institute said in a report that the delinquency rate and bounced bill rate for private companies are soaring due to the recent economic downturn, sluggish corporate performance, and increased repayment burdens caused by prolonged high interest rates.
The delinquency rate for the January-March 2024 period for "vulnerable borrowers," which refers to businesses with multiple debts and low incomes and credit, and "marginal companies," which refers to businesses that have lost their competitiveness and are not expected to grow, is
The former was 10.0%, and the latter was 11.3%. The number of companies filing for bankruptcy in the first half of the year was 987, more than double the 428 cases during the COVID-19 period (first half of 2021).
According to the institute, the recent recession caused by a combination of factors including high interest rates, rising prices, and unstable capital markets has led to a corporate delinquency rate of about 1.8% and a rise in household debt.
The delinquency rate increased by about 1.0 percentage points. In particular, the delinquency rate for credit card payments among household debts increased by 2.5 percentage points, and the rate at which companies received unpaid bills also increased by four times compared to pre-recession levels.
Furthermore, if the base interest rate is lowered a total of three times over the next year by 0.25 percentage points each, the interest burden on loans to companies will be 4.42 trillion won.
The analysis also revealed that household debt will decrease by 4.53 trillion won (about 486.835 billion yen). Of this, interest burdens on marginal companies will be reduced by about 400 billion won.
The interest burden on low-income households will decrease by approximately 240 billion won (approximately 257 billion yen), while the interest burden on low-income households will decrease by approximately 42.987 billion won (approximately 42.987 billion yen).