DSR and Household debt delinquency: evidence from South Korea

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This analysis identifies critical DSR levels for household financial distress in South Korea, highlighting variations by employment type.

The critical debt service ratio threshold is alarmingly lower than current regulatory benchmarks, indicating higher financial strain.
Households with a lower DSR are vulnerable, especially temporary and self-employed workers with elevated delinquency risk.
Using microdata and a multilevel Bayesian threshold regression model, the analysis estimates the DSR-default tipping point.
The findings suggest a need for differentiated lending standards to address household credit risk and inform macroprudential policy.

Dongjin Pyo (2025) studied this question.

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