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Japanese Asset Prices, Yen-Dollar Exchange Rates and The Currency Crisis in Korea

Author

Listed:
  • Changkyu Choi

    (Catholic University of Daegu)

  • Dong-Geun Han

    (Yeungnam University)

  • Gang-Soo Jun

    (Catholic University of Daegu)

Abstract

Japanese banks' lending to Korea was influenced by Japanese asset prices and yen-dollar exchange rates. Before the Korean currency crisis in 1997, Japanese asset prices declined and yen depreciated. This made the BIS ratio of Japanese banks lower and thus enforced Japanese banks to withdraw their lending from Korea to keep up with the BIS ratio of Japanese banks. Japanese banks led US and European banks in withdrawing their lending from Korea. The Japanese banks' suspension of rollover to Korea directly caused the liquidity shortage and thus triggered the currency crisis in Korea.

Suggested Citation

  • Changkyu Choi & Dong-Geun Han & Gang-Soo Jun, 2001. "Japanese Asset Prices, Yen-Dollar Exchange Rates and The Currency Crisis in Korea," Korean Economic Review, Korean Economic Association, vol. 17, pages 271-286.
    • Handle: RePEc:kea:keappr:ker-200112-17-2-05
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-200112-17-2-05.pdf
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    More about this item

    Keywords

    Asset prices; Yen-Dollar exchange rates; currency crisis; Japanese banks lending;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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