South Korean Youth Deep In Debt Amid Rise in Crypto Trading – Report

Reports on October 20 indicate a sharp rise in loan defaults among young South Koreans, with many linking the trend to the growing popularity of cryptocurrency trading.

Data shows that a substantial number of individuals in their teens and twenties are defaulting on loans, particularly from neobanks associated with crypto exchanges.

The South Korean government said Thursday that it has decided to administer a regular mental health checkup for those aged between 20 and 34, starting next year as part of the state-run national health examination program.https://t.co/FbjD67l4Yd
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Loan Default Rates Among Youth in Neobanks

Data from K Bank, a neobank partnered with the cryptocurrency exchange Upbit, reveals that 4.05% of its customers under the age of 30 have defaulted on their loans. The Financial Supervisory Service provided this information following a freedom of information request from lawmaker Kim Jung. The reports indicate that young customers with linked accounts to crypto wallets may have borrowed funds for cryptocurrency investments but are now unable to repay their loans.

South Korean media outlets, such as Segye Ilbo and Digital Daily, noted that K Bank’s default rate among under-30s is notably higher than other neobanks. Kakao Bank, which has a partnership with Coinone, recorded a default rate of 2.1% for customers aged 29 and below, while Toss Bank, which does not currently work with any domestic crypto exchange, had a lower rate of 1.75%.

The overall default by young borrowers has cost South Korean neobanks around $288 million, representing a significant increase of 484% compared to December 2021. The data suggests this rise in defaults coincides with the increase in young people engaging in cryptocurrency trading.

Calls for Stricter Loan Screening

Financial experts said that many young borrowers who linked their bank accounts with Upbit may have borrowed excessively to invest in cryptocurrency. As a result, they have found themselves unable to repay their loans. Kim Hyun-jung, a member of the National Assembly’s Political Affairs Committee, stated, “Neobanks’ loan accessibility offer some positive aspects. But this can also make it easier for young people to take out loans beyond their means. This can expose them to serious financial risks.”

Kim urged neobanks to adopt stricter screening processes, suggesting that more discerning loan practices are necessary to prevent further issues. “We need measures that stop young people from taking out loans they can’t pay back,” Kim emphasized, stressing the importance of preventing overborrowing among young crypto traders.

K Bank, which is gearing up for an initial public offering (IPO) at the end of October, has seen a large influx of accounts from younger South Koreans interested in crypto trading. However, this rise in activity has also been accompanied by increasing concerns over loan defaults. As neobanks like K Bank continue to grow, attention is focused on their lending practices and the potential risks posed by customers involved in cryptocurrency trading.

Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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