More self-employed borrowers in second-tier savings banks are defaulting on their loans in South Korea, posing another financial risk to the Korean economy faced with multiple whammies.

The loan delinquency rate of the self-employed in domestic savings banks jumped to 4.4 percent in the first quarter from 2.93 percent three months ago, according to a Financial Supervisory Service report released by Ji Sang-wook, a lawmaker of the minor opposition Bareunmirae Party, on Sunday.

The default rate of savings banks that peaked at 5.13 percent in 2016 had come down to 3.78 percent in 2017 and 2.93 percent in 2018. The delinquency ratio is more than tenfold that of primary commercial lenders, which stood at 0.3 percent in the first quarter.

The outstanding loans held by the self-employed in savings banks surged 31.7 percent year over year to 13.7 trillion won ($11.6 billion) in 2018, compared with a 8.6 percent increase at first-tier banks.

The data suggests self-employed businesses who had been turned away by primary lenders have trouble meeting the expensive loans from second-tier banks.

The government has doubled down on regulations to cool the escalating default risks in second-tier lenders. It has capped the growth rates of self-employed debt in all financial institutions to 11 percent, with the debt growth in real estate and housing lease sectors limited to the 12 percent level. Self-employed debt in cooperative banks also cannot grow by more than 22.5 percent, with the share of housing lease-related loans restricted to 25 percent.

The Korean economy in the first quarter suffered a 0.3 percent contraction from the previous three months, its worst performance since the global financial crisis a decade ago. Exports, the country’s main engine for growth, weakened for the fifth straight month in April amid falling semiconductor prices and waning Chinese demand. The steep minimum wage hikes and reduced workweek have also put a strain on businesses large and small, with some employers responding to the higher labor costs by cutting new hires.

By Lee Sae-ha and Kim Hyo-jin

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