How would expansionary fiscal policy affect Korea's banking system?

Analysts are concerned about loan growth.

Moody's Investors Service says that the outlook on Korea's banking system remains stable, amid expansionary fiscal policy, policy rate cuts, and strong systemic support.

According to a release from Moody's Investors Service, Moody's Vice President and Senior Analyst Sophia Lee said the group expects loan growth roughly in line with nominal GDP.

Such moderate expansion likely means that banks are not taking excessive credit risks, she also said.

"Other supporting factors for Korean bank creditworthiness include improved funding and liquidity, adequate capitalization, and banks' efforts to streamline their workforce and branch networks," adds Lee.

Here's more from Moody's Investors Service:

Lee was speaking on the just-released "2015 Outlook -- Korean Banks", which expresses Moody's expectation of how bank creditworthiness will evolve in this system over the next 12-18 months.

On the negative side, asset quality remains pressured by struggling borrowers in industries such as construction, property project financing, shipbuilding, and shipping.

There are also early signs of deterioration in loans to small and medium-size enterprises. Corporate sector restructuring efforts, if successful, will help mitigate such poor asset quality.

Moody's forecast 3.8% GDP growth in 2015. Downside risks include slowing growth in China (Aa3 stable) and a strengthening of the Korean won against the Japanese yen.

In Moody's view, Korea has a strong support system. None of its national and regional banks have been liquidated in the past two decades, even when the banking system faced significant stress after the Asian financial crisis in the late 1990s.

The authorities -- through a mixture of liquidity and capital support -- have ensured that banks continue to operate as going concerns.

Commercial banks' loan-to-deposit ratios were stable at around 100% as of September 2014, and banks maintain sufficient short-term liquidity in both Korean won and foreign currency.