Feasibility Study on the Establishment of Credit Union Systems in North Korea: Centered on the Development Cases of South Korean Credit Unions

다국어 초록 (Multilingual Abstract)

This study explores the potential for introducing a credit union system in North Korea by analyzing the financial environment in North Korea and the development cases of credit unions in South Korea.
North Korea operates under a centrally planned economy, limiting the flexibility and innovation of financial services. As a result, many residents rely on high-interest informal financial markets, exacerbating the economic burden on financially vulnerable groups. The role of formal financial institutions is limited, and despite efforts under the Kim Jong-un regime to mobilize private capital, there are limitations due to the residents’ distrust of institutional finance.
The South Korean credit union model has been a successful case since the 1960s, providing affordable financial services, alleviating the economic burden on financially vulnerable groups, and fostering the self-reliance of local economies. This development can serve as a useful model for North Korea. Credit unions enable members to voluntarily save funds and obtain loans at affordable interest rates based on mutual credit, allowing capital to circulate within the community and contribute to economic revitalization.
Therefore, this study examines the feasibility of establishing a credit union system in North Korea, assuming long-term improvements in relations with the international community and easing of sanctions through denuclearization, especially as marketization and institutional improvements continue to evolve.
This could contribute to the economic self-reliance and enhancement of financial inclusivity for North Korean residents, serving as a significant opportunity to revitalize local economies and improve the quality of life.