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Inclusive Finance Needs Tailored Credit Assessment Over Simple Loan Expansion
Finance · Finance/Rental/Leasing · yonhap_finance · 2026-09-07
Experts argue that inclusive finance should focus on addressing the root causes of financial exclusion through customized credit solutions rather than just increasing loan volumes, ensuring both social impact and financial stability.
What Happened
Essence of Inclusive Finance: Inclusive finance should not be measured merely by the volume of loans supplied or interest rate cuts, but by the ability to design credit intermediation methods tailored to the specific needs of borrowers. Experts emphasize that identifying the underlying causes of financial exclusion is the most critical step in effective policy design.
Tailored Borrower Strategies: Borrowers with underestimated repayment capacity due to information asymmetry require improved assessment models, while those facing temporary liquidity issues need structural adjustments. For borrowers with impaired repayment capacity, debt restructuring and clear paths to financial recovery are more appropriate than simply providing new credit.
Challenges for Credit Finance: Since credit finance companies lack deposit-taking functions and rely heavily on external funding, they are highly sensitive to market interest rates. Demanding aggressive loan expansion can lead to unintended consequences, such as tighter approval criteria or reduced credit limits, which may further alienate vulnerable borrowers.
Balancing Inclusion and Stability: The success of inclusive finance should be evaluated using post-approval metrics like delinquency rates and successful repayment recovery rather than just approval volume. By improving data quality and creating sophisticated repayment structures, financial institutions can ensure that inclusion and asset soundness work in a complementary manner.