'Unproductive' Credit and the South-Korean Crisis
AbstractWe provide a novel empirical analysis of the South Korean economy that reveals large volumes of excess or 'unproductive' credit since the late 1970s, indicating that a sizeable proportion of total credit was used to refinance unprofitable projects. Our findings are consistent with the hypotheses of 'overlending' and 'overinvestment', which may reflect soft budget constraints and/or moral hazard. We argue that while these weaknesses were not on their own responsible for the financial crisis, their interaction with the risks emanating from capital account liberalisation created fertile ground for financial panic.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 01/2.
Date of creation: Jan 2001
Date of revision:
Contact details of provider:
Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
Phone: +44 (0)116 252 2887
Fax: +44 (0)116 252 2908
Web page: http://www2.le.ac.uk/departments/economics
More information through EDIRC
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-02-27 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Demetriades, Panicos O. & P. Devereux, Michael & Luintel, Kul B., 1998.
"Productivity and financial sector policies: Evidence from South East Asia,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 35(1), pages 61-82, March.
- Panicos O. Demetriades & Michael P. Devereux & Kul B. Luintel, 1995. "Productivity and Financial Sector Policies: Evidence from South East Asia," Keele Department of Economics Discussion Papers (1995-2001) 95/14, Department of Economics, Keele University.
- Alicia García Herrero & Javier Santillán & Sonsoles Gallego & Lucía Cuadro & Carlos Egea, 2002.
"Latin American Financial Development in Perspective,"
Banco de Espaï¿½a Working Papers
0216, Banco de Espa�a.
- Alicia García Herrero & Javier Santillan Fraile & Sonsoles Gallego Herrero & Lucía Cuadro Sáez & Carlos Egea Martínez, 2003. "Latin American Financial Development In Perspective," Finance 0304008, EconWPA.
- Philip Arestis & Panicos Demetriades & Bassam Fattouh, 2002.
"Financial Policies and the Aggregate Productivity of the Capital Stock: Evidence from Developed and Developing Economies,"
Economics Working Paper Archive
wp_362, Levy Economics Institute.
- Philip Arestis & Panicos Demetriades & Bassam Fattouh, 2003. "Financial Policies and the Aggregate Productivity of the Capital Stock: Evidence from Developed and Developing Economies," Eastern Economic Journal, Eastern Economic Association, vol. 29(2), pages 217-242, Spring.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mrs. Alexandra Mazzuoccolo).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.