earticle

영어

Today, credit security systems have a pivotal role in economic activity. Among them, a joint surety system has been most commonly used as a security for small-loan finance in the existing banks. Such joint surety system has been treated as a convenient financial instrument because it is possible for the public to lend money relatively easily by providing a surety in case that a potential debtor needs money but lacking credit. In addition, in the side of creditor, joint surety has an economic function of facilitating the retrieval of debt by reducing uncertain risk involved in the provision of credit to a debtor. However, it may cause economic or mental hardship to a surety because it may trigger a heavy responsibility to the surety. Meanwhile, with respect to a joint surety system, many improvements have been made in the first-tier financial world, but many improvements are needed in other financial world and private loan markets. A joint surety is mainly used by ordinary people who lack physical security and have bad financial status, and in Korea many financial institutions (such as private moneylender or other financial institutions), different from other financial institutions in the developed countries, continue to carry out less advanced financial practices of loan by relying on a surety's financial ability rather than thorough inspection of a debtor's credit. It is expected that 'Special Act on Protection of Surety' which was enacted for improving such behaviors of financial institutions and protecting a surety will play a pivotal role in minimizing adverse effects of a joint surety system and maximizing its' positive effects in its operation. In addition, it is necessary to carry out a future institutional supplementation regarding a joint surety system of corporate CEO which is still performed by the first-tier financial world.