'Debt Investment·Yeongkkeul' Household Financial Debt Hits Record High in Q3 Last Year...Corporate Funding Shrinks

On the 7th, Bank of Korea Announces '2020 Q3 Financial Flow (Provisional)' Statistics
Securing Corporate Liquidity... "Increase in Short-term Savings Deposits"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] In the third quarter of last year, household financial debt reached 52.6 trillion won, an increase of 29.2 trillion won compared to the same period the previous year. This is the largest increase since the statistics were first compiled in 2009. The surge is a result of households significantly increasing their borrowings to purchase stocks and real estate.

According to the "2020 Q3 Financial Flow (Provisional)" statistics released by the Bank of Korea on the 7th, the net fund procurement by the household and nonprofit sectors (hereafter households) from July to September last year was 53.2 trillion won, up 29.2 trillion won from 24 trillion won in Q3 2019.

The financial flow statistics record the movement of money over a certain period by economic agents and financial assets, providing a comprehensive overview of where money flowed during that period.

Fund utilization refers to the net acquisition of financial assets, while fund procurement means the net issuance of financial liabilities. The fact that households’ net fund utilization (fund utilization minus fund procurement) showed a positive value means that the net acquisition of financial assets exceeded the net issuance of financial liabilities.

Household fund utilization in Q3 last year was 83.8 trillion won, an increase of 43.2 trillion won compared to the same period the previous year.

During Q3 last year, equity securities and investment funds increased by 22.5 trillion won due to increased stock investments. On the other hand, deposits at financial institutions decreased by 2.8 trillion won compared to the same period the previous year.

For non-financial corporations (hereafter corporations), deposits at financial institutions expanded significantly to secure liquidity amid the COVID-19 pandemic. Deposits at financial institutions by non-financial corporations reached 7.8 trillion won, an increase of 5.3 trillion won compared to the same period the previous year.

Corporate fund procurement also rose sharply from 26.5 trillion won to 38.7 trillion won during the same period.

Regarding this, a Bank of Korea official explained, "Fund utilization increased more than fund procurement, leading to a tendency for net fund procurement to shrink," adding, "As corporations continue efforts to secure liquidity, deposits have increased mainly in short-term savings deposits."

This content was produced with the assistance of AI translation services.