Heterogeneity in Corporate Loan Portfolio Adjustments during COVID-19: Evidence from Korean Financial Institutions
Abstract
This study examines how COVID-19 changed corporate loan portfolio strategies in Korea, focusing on differences between banks and non-bank financial institutions using firm-level micro transaction data. Comparing pre- and post-pandemic periods, we find clear sectoral differences in risk management. After COVID-19, banks increased average loan amounts to higher-credit firms while continuing a pre-existing trend of strengthening overall loan quality. Non-bank institutions, however, shifted to a more risk-averse strategy only after the pandemic. Their changes for above-average credit borrowers were limited; instead, they improved average credit quality within lower-credit segments without significantly changing average loan size. These results show that major external shocks trigger different portfolio adjustment mechanisms across financial sectors and provide practical implications for macroprudential policy and sector-specific supervision.