• KDI Journal of Economic Policy
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• v.32 no.4
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• pp.1-34
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• 2010

We conduct a comprehensive risk analysis of household debt in Korea for the first time using the whole sample credit bureau (CB) data of 2.2 million individual debtors. After analysing debt service capacity profiles of debtor groups classified by the borrower characteristics such as income, age, occupation, credit scoring, and the type of creditor business companies, we investigate the impact of interest rate and income changes on debt service-to-income ratios (DTIs) and default rates of respective debtor groups. Empirical results indicate that debt service burdens are relatively high for low income wage earners, high income self-employed, low income capital and card loan holders, and high income mutual savings loan holders. We also find that debtors from multiple financial companies are particularly weak in their debt service capacity. The scenario analysis indicates that financial companies, with the current level of capital buffers, may be able to absorb negative consequences arising from the increase in DTIs and loan default rates if the interest rate and income changes remain modest. However, the negative consequences may fall disproportionately on non-bank financial companies such as capital, credit card, and mutual savings banks, whose debtors' DTIs are already high. We also find that the refinancing risk of household debt is relatively high in Korea as more than half of household mortgage debts are bullet loans. As the DTIs of mortgage loan holders are already high, under the current DTI regulation, mortgage loans may not be readily refinanced especially when the interest rate rises. Disruptions in mortgage loan refinancing may put downward pressure on housing prices, which may in turn magnify refinancing risk under the current loan-to-value (LTV) regulation. Overall our analysis suggests that, for more effective monitoring of household debt risk, it is necessary to combine existing surveillance schemes based on macro aggregate indicators with more comprehensive and detailed risk analyses based on micro individual data.

• Korean Journal of Social Welfare
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• v.69 no.2
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• pp.171-190
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• 2017

This study examined the impact of indebtedness on depressive symptoms and suicidal ideation. The data came from the 4th to 10th waves of the Korea Welfare Panel Study, collected from 2009 to 2015. Analyses were conducted using logistic regression for longitudinal data that combines the fixed effects and random effects approaches. The results show that a high level of indebtedness substantially increased the risk of depressive symptoms. The household leverage ratio-the ratio of total household debt to disposable personal income-of 400% or higher increased the odds of probable depression by 50% compared with the ratio under 100%. When the percentage of personal income that goes toward paying debt is 30% or higher, the odds of probable depression went up by 66% than when the percentage of debt payment of disposal income is under 10%. The findings suggest that debt relief agencies and their programs need to incorporate means to identify and address emotional stress related to the excessive debt. This study also contributed to enriching the literature on social determinants of health by demonstrating that indebtedness is an important socioeconomic characteristic affecting individuals' mental health.

• Korean Journal of Human Ecology
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• v.21 no.2
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• pp.225-240
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• 2012

The purpose of this study was to investigate the determinants of households with risky debt loads. The study used financial ratios to determine which households were over-indebted. The 3 ratios used were Debt to Asset ratio, Debt to Financial asset ratio, and Debt Service ratio. Data for this study was the 2011 Survey of Household Finance. Households that demonstrated total debts of 70% or more when compared to total assets were 8.8%. Households that demonstrated a debt load totaling 5 or more times their total financial assets were 19%. Households with monthly repayment obligations of 40% or more of disposable income were 20%. Households that fulfilled all 3 financial ratio criteria were 1.5% of total indebted households. Over-indebted households demonstrated severe economic condition in terms of debt, but not all over-indebted households were categorized as being in economically vulnerable group. The major determinants of households with risky debts were income, asset, purpose of loans, and spending behavior of the households.

• Journal of Labour Economics
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• v.40 no.1
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• pp.37-68
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• 2017

This study analyzes the relationship between household debts and married female's labor supply. For doing this we construct effective interest rate faced by each household using interest paid amount and household financial debt amount. The effective interests rate for the households which have no financial debt are estimated by Heckman Selection model. The estimation results show that the increase in effective interest rate has led to the expansion of married women's the labor market participation. This suggests a possibility that negative scenarios resulting from an increase in interest rate can be partially offset by an increase in household labor supply and a rise in labor income.

• Journal of the Korean Home Economics Association
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• v.45 no.10
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• pp.45-57
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• 2007

The causes of indebted overspending were investigated by examining household expenditure patterns using the data from the 2002 Family Expenditure Survey. The five major expenditure categories were identified by factor analysis, and the six types of indebted overspending were clustered. About 28% of the indebted overspending was done out of necessity, and food, utilities, housing, and health care accounted for about 42% of the household expenditure. Luxury spending accounted for about 25% of the overspending by indebted households who spent about 24% of the household expenditure on clothing, entertainment, and private education. Cars (22%) and education (20%) were found to be other major causes of indebted overspending. Paying off debt and durable purchases were identified as the major causes of indebted overspending, but had a low frequency. Finally, the financial status of the four major types of indebted overspending households was evaluated.

• Journal of Family Resource Management and Policy Review
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• v.18 no.1
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• pp.93-114
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• 2014

This study aims to investigate the levels of assets and debts that male- and female-headed households have in comparison to married-couple households. Toward this end, a series of analyses of data from the 2011 Korean Household Finance Survey on the assets and debts of single-parent households are conducted. The empirical results reveal that the amounts of assets and net worth of married-couple households were significantly larger than those of male- and female-headed households. A comparison between male- and female-headed households show that the latter were more likely to hold financial assets such as savings accounts, savings insurance and mutual funds. The amounts of assets of female-headed households were significantly larger than those of male-headed households. Furthermore, the amount of credit card debt in mele-headed households was significantly larger than that in female-headed households.

• Journal of Families and Better Life
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• v.19 no.5
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• pp.279-291
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• 2001

This study was peformed to identify a credit limit of the household. For this purpose, the differences in household economy by debt burden and the effects of debt burden on household economy was analyzed with the data of the Family Income and Expenditure Survey in 1999. The results showed that the household with debt burden, are likely to cut savings not consumption expenditures. The critical level of debt burden which distorts the household economy is found to be 25%. If the debt burden of the household exceeds 25%, they are no longer to save and ought to borrow to repay current debt.

• Journal of Family Resource Management and Policy Review
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• v.7 no.2
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• pp.45-57
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• 2003

This study analyzed the differences in household debt characteristics by wealth levels. The dataset used was the 2000 National Survey of Family Income and Expenditure. The major findings of this study were as follows; First, about 49% of sample owned some amounts of debt. Household in high wealth levels had lowest debt burden while households in low wealth level had highest debt burden. Second, the amounts of debt owed to financial agents were highest regardless of wealth levels. Third, all groups borrowed money for the purpose of purchasing real estate.

• Proceedings of KHEA Conference
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• 2002.10a
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• pp.97-97
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• 2002

• Proceedings of KHEA Conference
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• 2003.10a
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• pp.142-142
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• 2003