Korea Federation of SMEs' Policy Survey on Expectations from the New Government
Majority Oppose Debt Adjustment Through Bad Bank
"Incentive Measures Needed for Diligent Payers"
Eight out of ten small business owners believe that the recently implemented Livelihood Recovery Consumption Coupon, which has been in effect since last week, will be effective in revitalizing domestic demand.
According to the results of the "Policy Survey for Small Enterprises and Small Business Owners' Expectations from the New Government," released by the Korea Federation of SMEs on July 27, 81.1% of respondents answered that the consumption coupon would have a positive effect on boosting domestic demand. This survey was conducted by the Federation from July 17 to July 20, targeting 396 subscribers of the Yellow Umbrella (a mutual aid program for small enterprises and small business owners).
On the 20th, a notice regarding the Minsheng Recovery Consumption Coupon was posted at a tire shop in Seoul. Photo by Yonhap News
When asked about the most urgent tasks the new government should prioritize for small enterprises and small business owners, the majority responded "revitalizing domestic demand and promoting consumption" (39.4%), followed by "financial support" (32.4%) and "strengthening the social safety net" (12.0%).
Regarding the adjustment of long-term and small delinquent debts through a bad bank, opposition (59.1%) was higher than support (40.9%). This appears to reflect concerns about fairness with diligent payers and the potential for moral hazard.
When asked whether a dedicated credit evaluation model for small business owners, in addition to the traditional financial statement-based credit assessment such as sales figures, is necessary for bank loans, the majority (71.0%) answered that it is necessary. The Federation analyzed, "Financial institutions should prepare measures to assess the creditworthiness of small enterprises and small business owners by utilizing a variety of alternative information, such as electricity bill payment history and the duration of Yellow Umbrella subscription, in addition to traditional financial data."
Lee Minkyoung, Head of Policy at the Korea Federation of SMEs, stated, "We hope that the Livelihood Recovery Consumption Coupon will serve as a catalyst for revitalizing domestic demand," adding, "While supporting the recovery of vulnerable borrowers through a bad bank is a welcome initiative, we must also consider incentive measures for diligent payers so that those who faithfully repay their loans do not feel a sense of deprivation."
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