Twenty-something South Koreans engrossed with stock and crypto investment in the face of job and income stagnation increasingly have turned to multiple lenders.
The number of people in their 20s who have been taking out loans from more than three financial firms as registered private business owners reached 4,077 last year, nearly doubling from 2,068 from a previous year, according to data obtained by Yun Chang-hyun, a lawmaker from the main opposition People Power Party from NICE Information Service on Monday.
The number of heavily indebted 20-somethings increased at a twice faster pace than people in other age groups last year. The number heavy debtors in their 30s rose 59.6 percent from a year earlier to 32,644 in 2020, 40s 50.3 percent to 67,894, 50s 50.3 percent to 60,139 and 60 or older 69.5 percent to 30,096.
The number of the multi-indebted in their 20s in the household loan sector also rose 5.5 percent from 2019 to 319,232 in 2020, growing at the second-fastest pace following a 6.8 percent increase of those aged 60 and over.
Young people having trouble in finding job or start a business amid pandemic-induced economic hardships are turning to multiple financial institutions to get by, experts believe. Young Koreans with little credit history are likely to resort to expensive loans from multiple non-banking institutions.
“Those in their 20s have been hit hardest by the devastating employment shock from Covid-19,” said Yonsei University professor Sung Tae-yoon. “They have been pushed into debt because their income declined due to the lack of part time jobs and they are likely to engage in unsustainable businesses like delivery,” he added. In Korea, delivery workers are categorized as a private business owner.
The cryptocurrency and stock investment boom may have led to the surge in the number of debt-distressed young Koreans. Twenties and 30s are behind more than 60 percent of crypto trade.
By Yoon Won-sup and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]