Studying For The Storm Of Credit Card Debt In Taiwan

Taiwan has reforming economic structure since the Asian Financial Turmoil broken-out in July 1998. Banking industry is gradually focusing on consumer finance service, especially striving for the market share of the double-cards (Debit and Credit cards) which are considered as a profitable earning-tool also named " Golden Rooster Mother" . These years, Taiwan Government' s financial policies become more international, flexible with loosened control of foreign currency exchange. Economic power and consumption capacity have been increased dramatically. The credit cards, which are considered " Plastic Currency ", are becoming one of the common payment methods. Sourcing from Taiwan' s National Credit Card Processing Station, the circulated cards amounted to 45.5M units as of 2005 year end, 8.3 times of those as of 1996 year end; transaction amount reached to New Taiwan Dollar 1,421 Billion as of 2005 year end, 5.2 times of that as of 1996 year end.The increasing scale of double-cards amount results from Supervisor' s loosen control, distorted consumption concept, fraud advertising and illegally & violently debt colleting. Not only the storm caused many card users go bankruptcy, but also increased banks' provision and bad debts. Many banks experienced largest net loss within years and had to reexamine or stop their credit cards business, some of them even faced hostile takeover crisis. The consumption capacity thus deteriorated.The article will analysis the worse scenario case of cards storm in Korea in 2003 as well. As a comparison, PRC China is experiencing fast economic growth and increasing people' s consumption capacity. In line with the surge demand for payment by double-cards instead of cash, domestic banks in China market are encouraging to expand their double-cards business, not to mention the international banks. The purpose of this article is serving as a reference for preventing "Card Debt Storm " in PRC China, by comparing the Taiwan & Korean cases.