Hong Kong has seen cases of personal bankruptcy hit a record high in the first eight months of 2002 as the economy struggles to pull out of recession.

Between January and August personal bankruptcies nearly tripled to 14,847, compared with the same period last year.

Bankers say a change in law reducing the length of time bankrupt individuals are banned from borrowing - from eight years to four years - has caused the rise.

But some analysts have blamed the banks themselves and their drive to encourage consumer lending.

Credit cards continue to generate profits for the banks but demand for mortgages, which carry a thin margin, remains weak.

At the end of June there were 9.5 million credit cards in circulation in Hong Kong, which has a population of 6.8 million people.

Credit card write-offs rose 47% in April to June 2002 compared with the first three months of the year, but they still remain highly profitable.

Lagging behind

Bankers believe sharing credit information about customers is the key to cutting bankruptcies.

They want the government to allow them to share such data but this is opposed by some people on privacy grounds.

Rising unemployment is also thought to have contributed to the surge in bankruptcies.

It has reached a record level of 7.8% after two recessions in four years battered Hong Kong's economy.

There are now some positive signs with the latest figures showing a move back into growth, but the economy only expanded by 0.5% between April and June this year and this was the fastest three-month growth for nearly two years.