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Causes of the Korean Financial Crisis: Lessons for Policy

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  • Joon-Ho Hahm
  • Frederic S. Mishkin

Abstract

This paper uses an asymmetric information framework to understand the causes of the recent financial crisis in Korea. It shows that the Korean data is consistent with this explanation of the crisis. It then draws on this analysis to discuss several lessons that can help guide Korean policymakers in the future.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7483.

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Date of creation: Jan 2000
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Publication status: published as Shin, Inseok (ed.) The Korean Crisis, Before and After. Seoul: Korean Development Institute, 2000.
Handle: RePEc:nbr:nberwo:7483

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Citations

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Cited by:
  1. Kang-Kook Lee & James Crotty, 2001. "Economic Performance in Post-Crisis Korea: A Critical Perspective on Neo-Liberal Restructuring," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp23, Political Economy Research Institute, University of Massachusetts at Amherst.
  2. Yung Chul Park & Jong-Wha Lee, 2003. "Recovery and Sustainability in East Asia," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 275-320 National Bureau of Economic Research, Inc.
  3. HONIG, Adam & JAIN-CHANDRA, Sonali, 2006. "Micro-Level Evidence on the Role of MoralHazard in the Asian Financial Crisis," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 6(1).
  4. Pavel Dvořák, 2007. "Monetary Cycle Theory, Debt Problem and Financial Crises," Politická ekonomie, University of Economics, Prague, University of Economics, Prague, vol. 2007(2), pages 183-205.
  5. Yongil Jeon & Stephen Miller, 2004. "The effect of the Asian financial crisis on the performance of Korean nationwide banks," Applied Financial Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(5), pages 351-360.
  6. Takuji Kinkyo, 2004. "Transmission channels of capital flow shocks: why Korean crisis was so severe," Working Papers, Department of Economics, SOAS, University of London, UK 139, Department of Economics, SOAS, University of London, UK.
  7. Bratsiotis, George J. & Robinson, Wayne, 2005. "Currency composition of debt, risk premia and the 1997 Korean crisis," Economic Modelling, Elsevier, Elsevier, vol. 22(3), pages 459-471, May.
  8. Hyun Song, 2005. "Liquidity and Twin Crises," Economic Notes, Banca Monte dei Paschi di Siena SpA, Banca Monte dei Paschi di Siena SpA, vol. 34(3), pages 257-277, November.
  9. Marek Dabrowski & Malgorzata Antczak & Monika Blaszkiewicz & Malgorzata Jakubiak & Wojciech Paczynski & Marcin Sasin, 2001. "The Episodes of Currency Crisis in Latin American and Asian Economies," CASE Network Reports 0039, CASE-Center for Social and Economic Research.
  10. Jeon, Yongil & Miller, Stephen M. & Natke, Paul A., 2006. "Do foreign bank operations provide a stabilizing influence in Korea?," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 46(1), pages 82-109, February.
  11. Uður Emek, 2002. "The Role of Auction Design in Awarding Spectrum," Game Theory and Information, EconWPA 0209001, EconWPA.
  12. Kim, Yitae & Park, Kwangwoo & Ratti, Ronald & Shin, Hyun-Han, 2002. "Do Main Banks Extract Rents from their Client Firms? Evidence from Korean Chaebol," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2002-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  13. TSURUTA Daisuke, 2007. "Credit Contagion and Trade Credit Supply: Evidence from Small Business Data in Japan," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 07043, Research Institute of Economy, Trade and Industry (RIETI).
  14. Hoque, Hafiz A.A.B. & Kim, Jae H. & Pyun, Chong Soo, 2007. "A comparison of variance ratio tests of random walk: A case of Asian emerging stock markets," International Review of Economics & Finance, Elsevier, Elsevier, vol. 16(4), pages 488-502.
  15. Rajaraman, Indira & Vasishtha, Garima, 2001. "Non-performing loans of PSU banks: Some panel results," Working Papers, National Institute of Public Finance and Policy 01/4, National Institute of Public Finance and Policy.
  16. Yongil Jeon & Stephen M. Miller, 2002. "The Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis," Working papers, University of Connecticut, Department of Economics 2002-28, University of Connecticut, Department of Economics.
  17. Ratti, Ronald A. & Seo, Jeonghee, 2003. "Multiple equilibria and currency crisis: evidence for Korea," Journal of International Money and Finance, Elsevier, Elsevier, vol. 22(5), pages 681-696, October.

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