Economy · 3 sources combined
Large-small firm interest gap
Expands to record high
In short
Large firms earn 19 times their interest costs, but small firms earn only 3 times.
Semiconductor boom boosted large firm earnings, but small firms recovered slowly.
Large firms increased investment loans, while small firms only increased operating loans.
Key facts
| When | The Bank of Korea released corporate statistics for Q2 this year on November 8. |
|---|---|
| Who | It compared the interest payment capacity gap between large and small firms. |
| What | Large firm interest coverage ratio 1,882%, small firm 322%, gap of 1,560 percentage points—the largest since 2015. |
| How | Large firm facility investment loans grew 16%, but small firms grew 1.3%, concentrated in operating funds. |
What it means for me
Even with improving economic indicators, small firms and self-employed may feel different economic conditions.
Large firm earnings gains may not translate into broader wage and employment improvements.
Under loan burden, focus may shift from business expansion to securing operating funds.
Economic indicator improvements may not immediately reflect in felt prices or incomes.
