6 out of 10 Economic Experts Say "Moon Administration Mishandled Loan Regulations"

Special Symposium of the Korean Finance Association Held
8.5 out of 10 Say "Regulators Should Intervene in Banks" Due to Widening Loan-Deposit Interest Rate Spread
9 out of 10 Say "Our Country's Financial Industry Competitiveness Is Low"

[Asia Economy Reporter Sim Nayoung] Six out of ten domestic economic experts evaluated the Financial Services Commission's policies used to curb the rapid increase in household debt as 'poorly executed.' They pointed out that household debt management measures, including the Debt-to-Income Ratio (DIT), Loan-to-Value Ratio (LTV), and Debt Service Ratio (DSR), excessively restricted the loan demand of actual borrowers.

On the 10th, at the special symposium of the Korea Finance Association held at Lotte Hotel in Jung-gu, Seoul, the results of a web survey conducted in February this year targeting 510 domestic financial professionals, businesspeople, professors, and researchers were announced in the session titled "Evaluation and Outlook of Financial Policy - Focusing on Expert Survey" (Professor Heo Junyoung, Department of Economics, Sogang University). Notably, 61.4% of economic experts ('very poorly executed' 17.5% + 'not well executed' 43.9%) gave negative evaluations regarding loan regulations.

Professor Heo, who presented the findings, said, "Considering the many negative evaluations from experts about the previous government's household debt policies, the current government should approach the household debt issue differently." He emphasized the need for risk management policies, stating, "The scale and growth rate of domestic household debt relative to Gross Domestic Product (GDP) are among the highest in the world."

Regarding the widening interest rate spread between deposits and loans at banks, 85.1% of economic experts expressed the opinion that "regulatory authorities should intervene in banks' abuse of market power" (54.5% for active intervention, 30.6% for passive intervention). Professor Heo noted, "Since the Bank of Korea raised the base interest rate in the second half of last year, loan interest rates have increased more than five times compared to deposit interest rates," adding, "Most businesspeople responded in favor of 'active intervention.'"

As for the competitiveness of the Korean financial industry, nine out of ten respondents rated it as "lower than advanced countries." The most common response was "low level but gradually increasing competitiveness" at 70.2%, but 19.4% also answered "low level and gradually decreasing competitiveness."

When asked about the reasons for low competitiveness, businesspeople mainly chose "using financial policy as a means to achieve political objectives" (30.4%). Professors and researchers pointed to "domestic market-oriented operations and a closed culture of financial institutions" (36.1%). Financial professionals cited "opaque or unnecessary financial regulations and supervision by regulatory authorities" (32.8%).

Professor Heo stated, "The domestic financial industry has maintained a conservative stance prioritizing the stability of the financial system after experiencing multiple economic crises," and pointed out, "Instead of innovation and challenge, it has developed a closed nature and external limitations by creating added value through price or service competition of similar products."

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