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Policy Study Impact of Lowering the Legal Maximum Interest Rate and Policy Implications December 31, 2021

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Series No. 2021-16

Policy Study KOR Impact of Lowering the Legal Maximum Interest Rate and Policy Implications #Financial Supervisory and Policy #Consumer Finance #Banks and Financial Institutions
DOIhttps://doi.org/10.22740/kdi.ps.2021.16 P-ISBN979-11-5932-716-2 E-ISBN979-11-5932-720-9

December 31, 2021

  • 프로필
    KIM, Meeroo
Summary
This report estimates the effect of a cut in the legal maximum interest rate on loan application rate, loan approval rate, default probability, a ratio of borrowers whose interest rate is lowered, changes in consumer surplus, and changes in financial institution profits.

To this end, I conduct the structural model estimation to establish a demand model for financial consumers' loan application and repayment and a profit maximization model for financial institutions. After that, based on the estimation results, I present the results of a counter-factual analysis for each scenario of lowering the legal maximum interest rate and each scenario of raising the funding rate.

In all scenarios where the maximum interest rate is cut by 2%p from the 24% level to the 10% level, the reduction in consumer surplus of borrowers excluded from the market exceeds the increase in consumer surplus of borrowers whose interest rates decrease. Accordingly, further lowering of the legal maximum interest rate from the 24% level causes an average decrease in consumer surplus. On the other hand, the financial institution's profit also decreases in all scenarios. In addition, even when the funding interest rate increases at the fixed legal maximum interest rate level, consumer surplus decreases as the number of borrowers excluded from the market increases.

This means that the current policy support is essential to minimize the side effects of lowering the legal maximum interest rate. Also, the fact that an additional number of borrowers is excluded from the market when the funding rate of financial institutions rises implies the need to introduce a legal maximum interest rate system linked to the market interest rate.
Contents
발간사
요 약

제1장 서 론

제2장 법정최고금리 도입 과정과 주요국의 현황 및 선행연구
 제1절 법정최고금리 도입 배경 및 과정
 제2절 주요국의 법정최고금리 현황
 제3절 선행연구 소개

제3장 기초자료 분석
 제1절 12금융권 신용대출시장 일반 현황
 제2절 법정최고금리 인하 전후 신용대출시장 변화

제4장 실증분석 방법
 제1절 축약형 분석
 제2절 구조모형 분석

제5장 실증분석 결과 및 해석
 제1절 축약형 분석 결과
 제2절 구조모형 분석 결과
 제3절 반-사실적 분석 결과

제6장 결 론

참고문헌
부 록
ABSTRACT
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