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Posted on December 31, 2008
South Koreans Turn to Loan Sharks Amid Global Credit Crisis…
Low-income South Korean households with poor credit ratings are facing increasing difficulty in borrowing money from banks and other financial service companies in the wake of the global credit crunch. Many are turning to loan sharks who charge significantly higher interest rates. In recent months, the government has introduced a range of steps designed to encourage domestic lenders to extend credit to small businesses and not households. This has made it even more difficult for low wage earners and the self-employed to secure cash amid rising debt and slow income growth.
Savings banks, insurance companies and private money lenders have become reluctant to lend money to poor households, as they are forced to hold more cash and strengthen risk management for their survival. With rising non-performing loans and deteriorating business conditions, lenders have become more reluctant to lend to businesses as they try to hold on to more cash and improve their capital adequacy ratios under the Bank for International Settlement (BIS) amid an increasingly uncertain economic outlook.
A Financial Supervisory Service (FSS), South Korean financial regulator, official said more low-income households are going to private moneylenders as it became more difficult to borrow money from banks and other financial firms. He added that FSS is encouraging financial institutions to expand microcredit programs for low-income earners and the self-employed.
Source: Microfinance Gateway
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FAQs on Microfinance
This interview was undertaken in Cape Town, South Africa between the co-founders of The MiFi Report, Nick Soper and James Beshara.
Nick: Could you describe Microfinance in one sentence?
James: Microfinance is the practice of providing the financial tools that you and I take for granted every day, such as credit, savings, insurance, etc., to those affected by extreme poverty.
Nick: Can [...]
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The MiFi Report Officially Launches! Aug. 21, 2008.
Welcome everyone to the world’s finest news site for everything microfinance. The MiFi Report was founded by James Beshara and Nick Soper out of Cape Town, South Africa as the first microfinance information site directed toward both the casual reader and the MFI experts alike.
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