SEOUL– South Korea’s excess funds decreased in the second quarter from a year earlier amid fast-rising interest rates, the central bank’s preliminary data showed Thursday.
The country’s total excess funds stood at 8.5 trillion won (US$6 billion) in the April-June period, down from 14 trillion won a year ago, according to the data compiled by the Bank of Korea (BOK).
Excess funds, the value of financial assets minus financial liabilities, measure the flow of funds of households, companies and the government, the three basic components of an economy.
The fall in excess funds came after the central bank raised its policy rate seven times by a combined 2 percentage points since August last year, seeking to tame the rising inflation.
Non-financial firms net borrowed 46.9 trillion won in the second quarter, compared with the 19.4 trillion-won net borrowing from a year ago.
They increased their short-term lending in the face of higher market rates, the BOK said.
Financial firms, on the other hand, saw their net lending soar to 31.3 trillion won, from a mere 2.9 trillion won a year earlier.
During the same three-month period, the government net borrowed 15 trillion won, a change from lending 6 trillion won in the same period a year earlier.
The BOK attributed the jump to increased government expenditures for defense, extra budgets and other matters.
Net financial funds managed by households and nonprofit organizations stood at 39 trillion won in the second quarter, sharply up from 24.5 trillion won from a year ago.
Households borrowed less, and parked part of their money at banks and other financial institutions, the BOK report stated.
Source: Yonhap News Agency