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

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.