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Stress testing household debt in Korea
Karasulu, Meral (Author)

URLURL - Presentation file, Visit http://www.imf.org/external/pubs/ft/wp/2008/wp08255.pdf New window

Abstract
Korean household debt has reached 148 percent of disposable income, high by emerging market standards. Most of this debt remains at variable rates, shifting the interest rate risk from better diversified financial institutions to households and increasing their sensitivity to macroeconomic shocks. This paper examines the sources of, and risks from, household debt by employing stress tests on household level panel data. Results suggest that a 100-300 bps increase in interest rates could increase distressed household debt household debt by 8 1/2 -17 percentage points (ppt). A drop in real estate prices by 10?30 percent could add another 4 ppt to distressed debt. Ongoing transition to amortizing mortgages in 2008-09 presents additional challenges as interest payments on debt are likely to increase further.

Language:English
Keywords:Koreja, nepremičnine, stanovanja, krediti, zadolženost, testiranje, analiza, Korea, real estate, appartments, credit, indebtedness, testing, analysis
Work type:Not categorized (r6)
Organization:EF - Faculty of Economics
Year:2008
Publisher:International Monetary Fund
Number of pages:21 str.
Place:Washington (D.C.)
UDC:336
COBISS.SI-ID:18509286 Link is opened in a new window
Views:300
Downloads:142
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