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Financing Growth without Banks: Korean Housing Repo Contract

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Listed:
  • Hyun Shin

    (Princeton University)

  • Se-Jik Kim

    (Seoul National University)

Abstract

Imperfect financial intermediation is a key bottleneck in economic development. Korea's unique Jeonse or housing repo contract channels funds directly from tenant/lenders to landlord/entrepreneurs, by-passing the banking system. In a housing repo, the landlord/entrepreneur puts up the house as collateral when borrowing from the tenant/lender. The lender's loan is secured by living in the collateral asset, lowering the cost of capital and increasing credit. Jeonse has been the dominant form of rental contract in Korea, and has served as a mode of direct debt financing that by-passes the banking sector.

Suggested Citation

  • Hyun Shin & Se-Jik Kim, 2013. "Financing Growth without Banks: Korean Housing Repo Contract," 2013 Meeting Papers 328, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:328
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    File URL: https://economicdynamics.org/meetpapers/2013/paper_328.pdf
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    References listed on IDEAS

    as
    1. Andrea L. Eisfeldt & Adriano A. Rampini, 2009. "Leasing, Ability to Repossess, and Debt Capacity," Review of Financial Studies, Society for Financial Studies, vol. 22(4), pages 1621-1657, April.
    2. Follain, James & Lim, Gill-Chin & Renaud, Bertrand, 1980. "The demand for housing in developing countries: The case of Korea," Journal of Urban Economics, Elsevier, vol. 7(3), pages 315-336, May.
    3. Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
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