Individuals Raised Twice More Funds

Influenced by low interest rate, individuals raised twice more funds, but surplus funds decreased to less than half from last year.

According to the `Cyclical Funds Movement in 2001` announced by the Bank of Korea (BOK) on the 27th, individuals including small private companies and private non-profit institutions raised 70 trillion and 500 billion won, which is increased by 94.2 percent from last year. That`s because individuals demanded more money for house as the sale price of house and deposit money for rental were increased, and financial institutions like credit card companies, banks and mutual saving banks supplied surplus funds for household loan.

Individuals invested the loan in real estate, and spent (8.4 percent) more than the increase rate of income (4.7 percent).

Individual financial property is 2.44 times more than the amount of debts. The ratio of individuals` assets to debts is decreasing from 2.89 times in 1999 to 2.64 times in 2000.

When interest rate was lowered, individuals reduced saving deposits, and invested funds in beneficiary certificate and commercial paper.

The amount of surplus funds, which is calculated by subtracting borrowed money from operating funds, was 54.7 percent less than that of last year, which is the 13 years low since 1988.

Meanwhile, enterprises reduced loans by 21.2 percent, especially the funds for investment by 31.3 percent due to business recession.

Sang-Chul Kim sckim007@donga.com