Taiwan Stocks Face Crash Risk as Banks Tighten Controls on Heavily Leveraged Borrowers

The term “four loans under one roof” refers to investors simultaneously carrying mortgages, auto loans, margin loans and unsecured personal loans, then borrowing more to invest in stocks and increase leverage. Taiwan’s benchmark stock index surged from 30,000 points to 46,000 in 2026. After a U.S. stock-market correction on June 5, concerns grew that a sharp fall in Taiwan stocks on June 8 could trigger margin calls and forced liquidations, transmitting individual credit risk to the banking system.

On June 23, Taiwan’s Financial Supervisory Commission said personal lending showed no abnormalities and that it would not launch a targeted inspection for the time being. Domestic banks had NT$47.35 trillion in total loans at the end of May, including NT$22.46 trillion in personal loans, which rose by NT$199 billion during the month. Central bank data released on June 26 showed the overnight interbank rate falling for five consecutive days, from 0.827% to 0.819%. Banks also review applications under a debt-burden ratio cap of 22 times monthly income and a 70% monthly debt-to-income threshold, while monitoring how borrowers use funds after loans are issued.