[Asia Economy Reporter Song Seung-seop] It has been found that the supply of credit guarantees has a positive impact on Gross Domestic Product (GDP) and employment improvement.
On the 28th, the Korea Credit Guarantee Fund announced the results of a research project titled "Analysis of Credit Guarantee Performance and Guarantee Policy Directions in the Post-Corona Era." The study was initiated to measure the performance of increased guarantee support during the COVID-19 period and to explore effective guarantee policies. The research was conducted by a team led by Professor Yang Hyun-seok of Korea Aerospace University over six months starting from June last year.
According to the study, the impact of an increase in guarantee balance on GDP (based on a 30-month cumulative period) was 3.7 times. This means that if credit guarantees increase by 1 trillion KRW, GDP increases by 3.7 trillion KRW. A Korea Credit Guarantee Fund official explained, "When guarantees are made, companies use the surplus funds to purchase raw materials and invest, which circulates money," adding, "It was found to act as an economic safety net by offsetting GDP decline during economic downturns."
Guarantees also affected job creation and stability. For every 100 million KRW of new guarantee amount, 0.23 new jobs were created. There was also an effect of maintaining 0.59 existing jobs.
Additionally, companies that received credit guarantees during the COVID-19 crisis recorded a sales increase of about 4.9%. In contrast, companies that did not receive guarantees experienced a 17.5% decrease in sales.
A Korea Credit Guarantee Fund official emphasized, "It has been confirmed that the expanded support of credit guarantees positively affects the business performance of small and medium-sized enterprises and small business owners," and added, "Based on these results, Shinbo will maintain an expansionary guarantee policy this year to support a full economic normalization."
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