South Korean loans to small- and medium- sized enterprises (SMEs) are likely to have grown at a record low rate this year, as commercial lenders introduce stricter standards for lending, the central bank said.
According to the Bank of Korea (BOK), the outstanding balance of loans to SMEs was 241.6 trillion won (US$227.8bn) as of November, up 12.9 trillion won from the end of 2003.
Given that most South Korean companies tend to repay loans in December than to apply for new ones, the growth in lending may shrink below the 10 trillion won mark, the BOK said.
If so, it would mark the lowest growth since 1999, when the central bank started to compile lending data. So far, the lowest growth had been in 2001 when the loans increased by 11.4 trillion won from 2000.
The central bank attributed the modest growth to stricter regulations observed by lenders when issuing new loans to small companies.
