{"id":2204789,"date":"2024-04-22T16:25:25","date_gmt":"2024-04-22T07:25:25","guid":{"rendered":"https:\/\/koreapro.org\/?p=2204789"},"modified":"2024-04-23T18:26:26","modified_gmt":"2024-04-23T09:26:26","slug":"financially-illiterate-south-koreans-put-nations-economic-future-at-risk","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/04\/financially-illiterate-south-koreans-put-nations-economic-future-at-risk\/","title":{"rendered":"Financially illiterate South Koreans put nation\u2019s economic future at risk"},"content":{"rendered":"
Despite South Korea\u2019s high education levels, with <\/span>over 70%<\/span><\/a> of high school graduates entering higher education institutions as of 2022, the nation faces a significant problem: a lack of financial literacy among its citizens.<\/span><\/p>\n Recent surveys consistently reveal that South Koreans lack a solid grasp of economics and finance. The <\/span>2018 S&P\u2019s global financial literacy survey<\/span><\/a> ranked South Korea 77th out of 142 countries, with a rate of only 33%. The survey assessed four financial concepts: risk diversification, inflation, numeracy and compound interest.<\/span><\/p>\n This deficiency in understanding economics and finance has led to risky financial behaviors, such as excessive borrowing and a rising delinquency rate among young Koreans, particularly those in their twenties and thirties. As a result, many young adults find themselves trapped in debt, struggling to repay loans taken out during the pandemic when interest rates were at an all-time low.<\/span><\/p>\n In response, the South Korean government started <\/span>compiling<\/span><\/a> national data in 2021 to assess citizens\u2019 level of economic and financial understanding.<\/span><\/p>\n \u201cIf you look at the <\/span>2023 report<\/span><\/a> by the Korea Development Institute, South Koreans consistently score below 60. Specifically, they show the least understanding of <\/span>monetary policy transmission mechanism<\/span><\/a> among other areas measured,\u201d Lee Ok-won, the head of the advisory committee at the Korea Council on Economic Education (KCEE), said.<\/span><\/p>\n Experts attribute South Koreans\u2019 risky financial behaviors, such as taking out excessive bank loans, to their pervasive lack of financial understanding.<\/span><\/p>\n \u201cWhen taking out loans, it is essential to first make sound judgments by assessing many factors, including one\u2019s yearly income and interest rates, which can fluctuate depending on economic situations,\u201d Lee Eun-hee, a professor of consumer science at Inha University, told <\/span>Korea Pro<\/span><\/i>.<\/span><\/p>\n \u201cMany young Koreans decided to take out loans without considering their financial capacity to repay during the pandemic when the interest rate hit an all-time low. The consequences of such indiscriminate borrowing are now evident as many grapple with snowballing debts due to higher interest rates,\u201d Lee added.<\/span><\/p>\n The delinquency rate among Koreans in their twenties and thirties is on the rise. As of June 2023, people under 30 accounted for <\/span>nearly 30%<\/span><\/a> of the total population classified as defaulters by financial institutions.<\/span><\/p>\n