The purpose of this paper is to empirically analyse the causes of sudden surge of credit defaulters during Kim Dae-Joong Administration after the IMP financial crisis. The focus of the study is twofold. One is an attempt to find the cause of the problem. The other is to examine the analytic foundations regarding how to resolve the issue of credit defaulters.
The dominant view has been that the increase of credit defaulters was due mainly to credit card overspending by respective individuals beyond their capability to repay. It also suggests that the problem be resolved at the individual level as each individuals are fully responsible for his/her own debt. By contrast, this paper points out the simplicity and irresponsibility of the dominant view in its causal explanation. Through an empirical analysis of in-depth interview survey of individual credit defaulters, this paper tries to show that the argument based on individual choice and moral responsibility lacks not only explaining power but also logical validity. The analysis also leads to the conclusion that an active role of government is essential in order for the problem of credit defaulters to be resolved.
Credit defaulters in Korea are deprived of their basic level of self-respect and civil rights that every human being should be able enjoy. It means that the problem of credit defaulters is not just an economic but social one inevitably intertwined with that of civil rights under democracy. In the final analysis, the issue of credit defaulters cannot be resolved if it is regarded as a problem only induced by the unhealthy way of individual overspending. Rather, it is crucial to note that it is a political, economic, and social issue that constitutes the characteristic of democracy in Korea.