With the confirmation of the supplementary budget, the establishment of the bad bank is now on track, and the Financial Services Commission has begun promoting the economic stimulus effects of the bad bank. The Financial Services Commission explained the expected benefits of the bad bank based on overseas studies, but in fact, there are several research results supporting the negative effects of the bad bank. Considering that each country has a different economic environment, there are concerns about treating fragmentary overseas research cases as policy expectations.
According to the financial sector on the 7th, the Financial Services Commission distributed a press release explaining the purpose of the bad bank immediately after the National Assembly's approval of the supplementary budget on the 4th. Through this press release, the Financial Services Commission noted, "Overseas studies have confirmed numerous economic effects from debt restructuring," and analyzed that "the economic benefits persist for a long time and help social stability." The overseas studies cited by the Financial Services Commission include four reports published by the National Bureau of Economic Research (NBER) and the CESifo Institute in Munich, Germany. The Financial Services Commission explained that the policy helps debtors rebuild their lives and injects vitality into the macroeconomy.
However, a comprehensive review of overseas research results indicates that debt restructuring is not only beneficial. There are analyses suggesting that debt restructuring does not achieve its intended effects. A working paper published in 2009 by economists Song Han and Gyeong Lee from the Federal Reserve noted that the asset gap between households that received debt relief through bankruptcy and those that did not experience bankruptcy widens over time.
Assuming the annual income of households that have experienced bankruptcy and those that have not is the same, the asset gap between the two groups during the 2 to 5 years after bankruptcy is estimated to be 77% of their annual income. When more than 10 years have passed since bankruptcy, the asset gap between the two households widens to 93% of their annual income. The researchers evaluated that "many bankrupt households were unable to achieve the goal of a 'fresh start' even after eliminating their debt."
There are also research results that find negative effects of debt restructuring in terms of employment. A report by Michael Dinershtein, a researcher at the National Bureau of Economic Research (NBER), published in February this year, tracked the income, employment, and consumption status of debtors after 43 million student loans were forgiven by the U.S. government in 2022. According to this study, the average monthly income of the debt forgivers decreased by 2.3%, and the employment rate fell by 0.4% after the student loan forgiveness. The researchers interpreted this phenomenon as, "(over time after debt restructuring) the effects of reduced labor increased," and described it as a typical "wealth effect" where the incentive to secure income decreased as the need to repay liabilities diminishes. Additionally, several studies point out that the negative effects of large-scale debt restructuring increase the burden on national finances.
Experts say it is difficult to directly apply overseas research results to domestic expectations. Kim Hyun-yeol, a researcher at the Korea Financial Research Institute, analyzed, "Each country has different economic scales and structures, so even if similar types of debt restructuring occur abroad, the impact on the Korean economy may vary."