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Economic experts worry about S. Korean financial crisis due to borrowing costs

Banks have also raised lending rates that have made it harder for businesses and households to borrow or pay back debt.

South Korea could face a financial crisis due to spiking borrowing costs that could weigh on businesses and households, according to a Bank of Korea (BOK) survey conducted on 72 economic and financial experts.

Of the experts, 58.3 percent said that chances are high or very high that a financial systemic crisis could take place “within a year.”

The figure was up from 26.9 percent seen in a similar poll conducted in May.

Of risk factors, 27.8 percent cited challenges confronting businesses when securing necessary funds amid rising borrowing costs.

Meanwhile, 16.7 percent worried about a high level of household debt and a growing debt-serving burden.

About 14 percent also cited the possibility of financial firms suffering their loans going bad, with 12.5 percent voicing concerns over a spike in market lending rates.

Banks have also raised lending rates that have made it harder for businesses and households to borrow or pay back debt.

As of end-September, outstanding household credit — credit purchases and loans for households — had reached 1,870.6 trillion won (US$1.37 trillion), up 2.2 trillion won from three months earlier, separate BOK data showed.

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