South Koreans ditch savings for stocks as geopolitical risks fuel borrowing surge

South Korean investors have shifted funds from bank deposits to the stock market today in recent weeks. The move follows a sharp rise in overdraft borrowing, driven by market volatility linked to geopolitical tensions.

Personal overdraft accounts at major banks reached 40.72 trillion won as of Thursday—the highest level since December 2022. This surge, amounting to a 1.3 trillion won increase in March alone, came as investors rushed to borrow money after a stock market dip caused by military clashes between the US and Iran.

Time deposits at the five largest banks also dropped by 2.79 trillion won over the past month, falling to 944.1 trillion won. Demand deposits saw an even sharper decline, shrinking by 8.6 trillion won during the same period.

Overdraft balances had previously peaked at 52.9 trillion won in April 2021 before declining. Stricter household lending rules kept the total between 30 and 40 trillion won from February 2023 until late 2025. However, the recent spike suggests renewed risk-taking among borrowers.

Financial experts have cautioned against excessive borrowing for investments. They note that over half of South Korea's household loans carry variable interest rates, which could leave borrowers exposed to rising costs.

The shift from bank deposits to stocks reflects a broader trend of investors seeking higher returns amid uncertainty. With overdraft borrowing climbing and deposit levels falling, regulators may face pressure to monitor household debt risks more closely.