Posted November. 20, 2008 08:20,
The number of corporate bankruptcies last month hit a 43-month high due to the spread of the global financial crisis, the Bank of Korea said yesterday.
The number of new corporations increased slightly for the month, so the number of company bankruptcies divided by that of new corporations reached its lowest level in 46 months.
The Bank of Korea said the number of corporate bankruptcies jumped 58.1 percent or 118 from September to 321 last month, the highest since March 2005 when 359 corporations went under.
In Seoul, 111 companies went under, the highest since 113 in May 2005. Provincial areas saw 210 corporations go belly up, though less than the 254 posted in October 2004.
By sector, the number of service companies failing almost doubled from 74 in September to 133 last month. In manufacturing, the number jumped from 66 to 109 while constructions figure grew from 49 to 65 over the same period. As more companies collapsed, the default rate on bills increased from 0.02 percent between July and September to 0.03 percent in October.
Last month, 3,975 corporations were set up, a rise of 304 from September but lower than last years monthly average of 4,457. The figure derived from dividing the number of new companies by that of bankrupt ones was 18.8, the lowest since 14.9 in December 2004.
A Bank of Korea official said, Many companies went bankrupt in the wake of worsening corporate profitability and financial difficulty due to the financial crisis and economic slowdown. Creating jobs is not easy since the number of new companies has stayed below 4,000 over the past three months.