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The Effect of the Asian Financial Crisis on the Performance of Korean Nationwide Banks

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Author Info

  • Yongil Jeon

    (Central Michigan University)

  • Stephen M. Miller

    (University of Nevada and University of Connecticut)

Abstract

The Asian financial crisis spread its effect quickly across a number of countries. Korea faced serious problems in her financial and corporate sectors. This paper considers the performance of Korean nationwide banks before, during, and immediately after the Asian financial crisis. The performance of Korean nationwide banks took a big hit in 1998. Most banks recovered somewhat in 1999 with the notable exception of the further deterioration of Seoul. Several factors possess strong correlations with bank performance. Among other standard findings, equity to assets correlates positively with bank performance, even when the government recapitalized a number of institutions that performed poorly. The Asian crisis did not affect the normal rules of good bank management. The government, however, directly intervened in the banking sector on a large scale to limit the scope of the crisis in the Korean economy.

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Bibliographic Info

Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2002-32.

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Length: 31 pages
Date of creation: May 2002
Date of revision:
Publication status: Published in Applied Financial Economics, March 2004
Handle: RePEc:uct:uconnp:2002-32

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Keywords: Asian financial crisis; Korean commercial banks; profitability;

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References

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  1. Gilbert, R. Alton & Wilson, Paul W., 1998. "Effects of Deregulation on the Productivity of Korean Banks," Journal of Economics and Business, Elsevier, vol. 50(2), pages 133-155, March.
  2. Graciela L. Kaminsky & Carmen M. Reinhart, 2001. "Bank Lending and Contagion: Evidence from the Asian Crisis," NBER Chapters, in: Regional and Global Capital Flows: Macroeconomics Causes and Consequences, NBER-EASE Volume 10, pages 73-116 National Bureau of Economic Research, Inc.
  3. Miller, Merton, 1998. "Asian financial crisis," Japan and the World Economy, Elsevier, vol. 10(3), pages 355-358, July.
  4. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
  5. Joon-Ho Hahm & Frederic S. Mishkin, 2000. "Causes of the Korean Financial Crisis: Lessons for Policy," NBER Working Papers 7483, National Bureau of Economic Research, Inc.
  6. Yongil Jeon & Stephen Miller, 2004. "The effect of the Asian financial crisis on the performance of Korean nationwide banks," Applied Financial Economics, Taylor and Francis Journals, vol. 14(5), pages 351-360.
  7. Yongil Jeon & Stephen Miller, 2005. "Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis," Global Economic Review, Taylor and Francis Journals, vol. 34(2), pages 145-165.
  8. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 2001. "Fundamental Determinants of the Asian Crisis: The Role of Financial Fragility and External Imbalances," NBER Chapters, in: Regional and Global Capital Flows: Macroeconomics Causes and Consequences, NBER-EASE Volume 10, pages 11-46 National Bureau of Economic Research, Inc.
  9. Marcus Noland, 2000. "Avoiding the Apocalypse: The Future of the Two Koreas," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 94, 1st quart.
  10. Hsiao,Cheng, 2003. "Analysis of Panel Data," Cambridge Books, Cambridge University Press, number 9780521522717.
  11. Dongchul Cho & Kiseok Hong, 2001. "Currency Crisis of Korea: Internal Weakness or External Interdependence?," NBER Chapters, in: Regional and Global Capital Flows: Macroeconomics Causes and Consequences, NBER-EASE Volume 10, pages 337-380 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Yongil Jeon & Stephen M. Miller, 2002. "The Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis," Working papers 2002-28, University of Connecticut, Department of Economics.
  2. Chantapong, Saovanee & Menkhoff, Lukas, 2005. "Cost Efficiency of Domestic and Foreign Banks in Thailand: Evidence from Panel Data," Proceedings of the German Development Economics Conference, Kiel 2005 9, Verein für Socialpolitik, Research Committee Development Economics.
  3. Yongil Jeon & Stephen M. Miller, 2002. "The Effect of the Asian Financial Crisis on the Performance of Korean Nationwide Banks," Working papers 2002-32, University of Connecticut, Department of Economics.
  4. Thoraneenitiyan, Nakhun & Avkiran, Necmi K., 2009. "Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA," Socio-Economic Planning Sciences, Elsevier, vol. 43(4), pages 240-252, December.
  5. John P. Bonin & Masami Imai, 2005. "Soft Related Lending: A Tale of Two Korean Banks," Wesleyan Economics Working Papers 2005-011, Wesleyan University, Department of Economics.
  6. Bonin, John P. & Imai, Masami, 2007. "Soft related lending: A tale of two Korean banks," Journal of Banking & Finance, Elsevier, vol. 31(6), pages 1713-1729, June.
  7. Songül KAKÝLLÝ ACARAVCI & Ahmet Ertuðrul ÇALIM, 2013. "Turkish Banking Sector’s Profitability Factors," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 27-41.

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