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Corporate financial structure of South Korea after Asian financial crisis: the chaebol experience

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  • Jiyoung Kim

    (Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO))

Abstract

The chaebol, a South Korean form of business conglomerate, has been a key factor in the country’s economic growth. In this study, the chaebol sector is added to the asset–liability matrix derived from a flow-of-funds analysis in order to explain the role of the chaebol in the Korean financial system. We find that the power-of-dispersion indices in the asset-oriented system differ between the chaebol and other private corporations. Between 1987 and 2002, the former has increased while the latter has declined. In the case of the chaebol, excess liabilities were reduced, while investments in financial assets were increased. This tendency led to an increase in the power-of-dispersion index in this asset-oriented system. Our previous research found a decrease in this index for the private sector in Korea. However, the index increased for chaebol when the private sector is divided into the chaebol and small-/medium-sized corporations in this paper. These results point to a greater concentration of economic power in the chaebol in the Korean financial market.

Suggested Citation

  • Jiyoung Kim, 2017. "Corporate financial structure of South Korea after Asian financial crisis: the chaebol experience," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-14, December.
    • Handle: RePEc:spr:jecstr:v:6:y:2017:i:1:d:10.1186_s40008-017-0085-8
    DOI: 10.1186/s40008-017-0085-8
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    References listed on IDEAS

    as
    1. Chung H Lee & Keun Lee & Kangkoo Lee, 2000. "Chaebol, Financial Liberalization, and Economic Crisis: Transformation of Quasi-Internal Organization in Korea," Working Papers 200004, University of Hawaii at Manoa, Department of Economics.
    2. Anne O. Krueger & Jungho Yoo, 2002. "Chaebol Capitalism and the Currency-Financial Crisis in Korea," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 601-662, National Bureau of Economic Research, Inc.
    3. Kim, Jiyoung, 2016. "Inter-industry analysis and monetary policy evaluations in the Korean flow of funds accounts," IDE Discussion Papers 619, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Kazusuke Tsujimura & Masako Mizoshita, 2003. "Asset-Liability-Matrix Analysis Derived from the Flow-of-Funds Accounts: The Bank of Japan's Quantitative Monetary Policy Examined," Economic Systems Research, Taylor & Francis Journals, vol. 15(1), pages 51-67, March.
    5. Morris A. Copeland, 1952. "A Study of Moneyflows in the United States," NBER Books, National Bureau of Economic Research, Inc, number cope52-1, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Bayari, Celal, 2020. "South Korean Economy and the Free Trade Agreement with China," MPRA Paper 102938, University Library of Munich, Germany, revised 21 Jun 2020.
    2. Oh, Hyunjin & Chung, Chune Young & Fard, Amirhossein, 2023. "Tacit vigilance in an emerging economy: An institution-based perspective of passive blockholder monitoring," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Githinji Njenga & Josphat Machagua & Samwel Gachanja, 2022. "Capital markets in sub-Saharan Africa," WIDER Working Paper Series wp-2022-112, World Institute for Development Economic Research (UNU-WIDER).
    4. Burkowski, Erika & Kim, Jiyoung, 2018. "Flow-of-funds analysis in the Brazilian economy (2004–2014)," IDE Discussion Papers 696, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    Keywords

    Flow-of-funds analysis; Asset–liability matrix; Financial conglomerates (chaebol);
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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