Loans in Finance and Insurance Sectors Reach 180.4 Trillion Won, Highest Since Records Began

[Economy 365]

As the stock market remains strong and "debt-financed investing" by investors increases, the scale of loans taken out by securities firms has reached an all-time high.

According to the Bank of Korea, loans in the finance and insurance sectors from deposit-taking institutions reached 180.4 trillion won in the first quarter of this year, the highest level since the statistics were first compiled.

This is interpreted as a result of securities firms borrowing large sums of money not only from banks but also from non-banking financial institutions to secure funds for investor credit loans and their own investments.

In fact, the balance of credit transactions, an indicator of "debt-financed investing," exceeded 30 trillion won on average for the first time in the first quarter and surpassed 36 trillion won last month.

The Financial Supervisory Service has summoned major securities firms and ordered them to strengthen risk management in response to the rapid surge in credit loans.

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