Story perspectives

Bank of Korea Flags Rising Self-Employed Delinquency, Calls Support

6/24/2026

Summary

**BOK Warns**

The Bank of Korea’s 2026 Financial Stability Report warned that tighter credit could raise delinquency among self-employed borrowers.
It said loans are concentrated in real estate, with rising liabilities and weakened repayment capacity after 2023 rate hikes, pushing delinquency from 2.04% in Q1 2024 to 2.58% in a pessimistic scenario.
It urged selective support for vulnerable borrowers (impact 0.8398 vs 0.1632) and comprehensive aid for older self-employed, including social-safety-net measures.

Summary

**BOK Flags**

The Bank of Korea warned that soaring debt-financed stock purchases and leveraged ETFs could amplify market volatility.
Margin loan balances reached 39.4 trillion won in May, more than double the level a year earlier.
Leveraged-ETF net assets rose 176.6% to 35.4 trillion won, pushing total leveraged exposure to 74.8 trillion won.
Repurchase-agreement balances hit 228.2 trillion won in May, 9.7 times the January 2015 level, heightening rollover-risk concerns.

Summary

**BOK Coordinates**

Officials said the benchmark rate could rise from 2.5% if inflation and risks increase.
The Bank of Korea will coordinate monetary and macro-prudential tools to tighten oversight of household debt.
Hwang Kunil warned that growing economic polarization may trigger financial instability.
A comprehensive plan will link financial, industrial, employment and welfare policies and continue real-estate project-financing restructuring to support self-employed firms.

History

Historical Context

The 1997 Asian financial crisis forced South Korea to accept a $58.4 billion IMF bailout and saw corporate debt surge. Those reforms curbed chaebol over-leverage in the economy, but today policy makers note significant margin loans total 39.4 trillion won, reviving the debt-overhang that prompted Hwang Kunil’s call for tighter macro-prudential rules.

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**BOK Warns**

The Bank of Korea’s 2026 Financial Stability Report warned that tighter credit could raise delinquency among self-employed borrowers.
It said loans are concentrated in real estate, with rising liabilities and weakened repayment capacity after 2023 rate hikes, pushing delinquency from 2.04% in Q1 2024 to 2.58% in a pessimistic scenario.
It urged selective support for vulnerable borrowers (impact 0.8398 vs 0.1632) and comprehensive aid for older self-employed, including social-safety-net measures.

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