Funds are Driven into Short-Term Instruments

The commercial funds don’t find an adequate target of investment and so are driven into the short-term instruments of investment trust firms. Banks have a lot of troubles in an application of fund owing to restraints of the household loans of the government.

According to ‘Trend of financial market in November’ published by the Bank of Korea (BOK) on December 6, the household loans increased by 2,076.3 billion won over October. Its increase was less than 4,045.8 billion won compared with the decrease of October (6,122.1 billion won).

Home equity loans were 2,835.2 billion won less than 4,799 billion won of the increase of October owing to the loan restraints of the government and low demand reason.

As a major cause of turning of increase tendency on the home equity loan, there is a slowdown of the increase on the home equity loan. However, the minus bankbook and credit loans decreased by 700 billion won. It has influence on it.

On the basis of the end of November, the balance of the household loans was 219,900 billion won increased by 59, 200 billion won over last year. The home equity loans were 1,128, 800 billion won increased by 43,900 billion won.

Business loans increased by 3098,5 billion won. Its increase went largely down over 6763.6 billion won of October. Such the slowdown of the business loans is because the increase of small business loan was 2,873.3 billion won and its increment decreased by 41% over 4,877.2 billion won of October.

In November, the bank deposit increased by 8,329.2 billion won. It has the large increase over 7,729.1 billion own of October.

In terms of the character of the bank deposit, the short-term marketable deposit was 3,499.6 billion won, increased by 9.6 times over 364.1 billion won of October. There is a remarkable increase tendency of the short-term deposit.

The deposit of investment trust firms increased by 2,569.6 billion won. Its increment was largely extended over 1,514.5 billion won of October.

In October, total liquidity increase rate (M3) increased to 12.5% increased slightly over 12.4% of October, and so it passed over the investigation extent of BOK (8∼12%).

Kim Min-Ho, vice-chief of currency operation team, BOK said, “Until the uncertainty of the economy decreases and an equipment investment of the companies is activated, commercial funds will be driven into the short-term instruments continuously. As the demand of business loan is small and the household loan restraints of the government are supported, banks has difficulties in operating the funds.”

Kwu-Jin Lim mhjh22@donga.com