Total debts owed by the self-employed in South Korea have snowballed in the past four years, far surpassing the growth pace of corporate and mortgage loans amid an economic slowdown, industry data showed Sunday.

The combined loans to the self-employed by Korea’s five largest commercial banks amounted to 134 trillion won ($122.5 billion) as of end-October, adding 40 trillion won from the end of 2010, according to the data from banks.

Loan totals were provided by Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank and NH Bank.

The amount has steadily risen from 104 trillion won in 2011 to 114 trillion won in 2012 and 124 trillion won in 2013, the data showed.

In contrast, loans to small- and medium-size companies have declined from 157 trillion won in 2010 to 147 trillion won as of October as banks toughened screening for corporate finance, following the 2008 global financial crisis.

The ratio of loans for the self-employed has jumped from 60 percent of corporate borrowing in 2010 to 91 percent so far this year, and market watchers say that if this trend continues, it could outdo corporate debt. Kookmin Bank and Shinhan Bank have already lent more money to independent business owners than to small- and medium-size enterprises, according to their figures.

There were 5.37 million self-employed people in Asia’s fourth-largest economy at the end of last year, up 10.4 percent from 2010, in large part because a growing number of baby boomers retired and opened their own businesses.

According to a report by the Small Enterprise and Market Service, self-employed people have spent more in starting new businesses than they made in profit, due to dull domestic consumption and tough competition.

The average annual sales by independent businesses fell to 8.77 million won last year, down from 9.9 million won in 2010, while the expenditures for starting new businesses, such as restaurants and accommodation facilities, rose 20 million won in 2010 to 90.2 million won last year, the report said.

Experts say the growing debt burden in the private sector could raise the delinquency rate and banks’ credit risk.

“Debts by the self-employed are the most vulnerable to economic recession,” said Kim Kwang-seok, a senior researcher at Hyundai Research Institute.

“Authorities should come up with measures as soon as possible to deal with their worsening debt service capability because the disposable income by the self-employed is decreasing.” (Yonhap)