01831cas a2200241 a 4500 AALejournalIMF005457 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451871135 1018-5941 BD-DhAAL BD-DhAAL Karasulu, Meral. Stress Testing Household Debt in Korea / Meral Karasulu. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (21 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Korean household debt has reached 148 percent of disposable income, high by emerging market standards. Most of this debt remains at variable rates, shifting the interest rate risk from better diversified financial institutions to households and increasing their sensitivity to macroeconomic shocks. This paper examines the sources of, and risks from, household debt by employing stress tests on household level panel data. Results suggest that a 100-300 bps increase in interest rates could increase distressed household debt household debt by 8 1\2 ?17 percentage points (ppt). A drop in real estate prices by 10?30 percent could add another 4 ppt to distressed debt. Ongoing transition to amortizing mortgages in 2008?09 presents additional challenges as interest payments on debt are likely to increase further. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2008/255 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/255/001.2008.issue-255-en.xml IMF e-Library