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Financial Crisis and Credit Crunch in Korea

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Author Info

  • Jong-Wha Lee
  • Eduardo Borensztein

Abstract

This paper analyzes the credit crunch following the recent financial crisis in Korea. Using enterprise-level data, we find that there were big differences in the magnitude of the credit contraction across different types of firms. In particular, chaebol (conglomerate)-affiliated firms appeared to have lost the preferential access to credit they enjoyed in the pre-crisis period, and credit appears to have been reallocated in favor of more efficient firms. This suggests that the credit crunch suffered by certain sectors can be attributed to the adjustment by banks and enterprises to the restructuring of the financial sector, rather than to tight monetary policy or an external credit constraint.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 00/25.

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Length: 28
Date of creation: 01 Jan 2000
Date of revision:
Handle: RePEc:imf:imfwpa:00/25

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Related research

Keywords: Credit; bank bank borrowing; bank lending; financial sector; bank loans; financial institutions; deposit money; bank of korea; deposit money banks; banking; bond; currency crisis; bonds; bank debt; corporate bond; excess demand; financial reform; bankrupt; corporate bonds; financial system; reserve requirements; banks ? loan; financial markets; domestic financial markets; bank loan; bank lending rates; bank regulation; bank restructuring; bond yield; capital adequacy; banking system; financial resources; bankruptcies; bank portfolios; bank data; financial statements; bank borrowers; international financial statistics; interbank market; capital standard; bond yields; financial market; money market; bond financing; bond rate; equity capital;

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Citations

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Cited by:
  1. Fattouh, Bassam & Scaramozzino, Pasquale & Harris, Laurence, 2005. "Capital structure in South Korea: a quantile regression approach," Journal of Development Economics, Elsevier, vol. 76(1), pages 231-250, February.
  2. Aaron Tornell & Frank Westermann, 2002. "Boom-Bust Cycles in Middle Income Countries: Facts and Explanation," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 111-155.
  3. Aguiar, Mark & Broner, Fernando A., 2006. "Determining underlying macroeconomic fundamentals during emerging market crises: Are conditions as bad as they seem?," Journal of Monetary Economics, Elsevier, vol. 53(4), pages 699-724, May.
  4. Bleakley, Hoyt C & Cowan, Kevin, 2004. "Maturity Mismatch and Financial Crises: Evidence from Emerging Market Corporations," University of California at San Diego, Economics Working Paper Series qt96r800f1, Department of Economics, UC San Diego.
  5. Ralf Müller, . "Korean Unification and Banking System - An Analysis in View of German Experiences and Korean Differences," IWH Discussion Papers 139, Halle Institute for Economic Research.
  6. Bhaumik, Sumon Kumar & Das, Pranab Kumar & Kumbhakar, Subal C., 2012. "A stochastic frontier approach to modelling financial constraints in firms: An application to India," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1311-1319.
  7. Puri, Tribhuvan N. & Kuan, Chikuang & Maskooki, Kooros, 2002. "An analysis of currency crisis in South Korea," Global Finance Journal, Elsevier, vol. 13(2), pages 121-146.
  8. Torsten Schmidt & Lina Zwick, 2012. "In Search for a Credit Crunch in Germany," Ruhr Economic Papers 0361, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  9. Ni, Shawn & Ratti, Ronald A., 2009. "Heterogeneous Parameter Uncertainty and the Timing of Investment during Crisis," Economics Discussion Papers 2009-12, Kiel Institute for the World Economy.
  10. Morris Goldstein, 2001. "IMF Structural Conditionality: How Much is Too Much?," Working Paper Series WP01-4, Peterson Institute for International Economics.

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