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The Rise of Korea's Credit Ratings after the Asian Currency Crisis: a Panel Analysis of Determinants

Author

Listed:
  • Huh, In

    (Korea Institute for International Economic Policy)

  • An, Jiyoun

    (Kyunghee University)

  • Yang, Dayoung

    (Korea Institute for International Economic Policy)

Abstract

The fluctuations of credit ratings can make a considerable impact on a nation's finance and economy. Moody's 9-notch downgrading of the Korea's credit rating from A1 to B- during the 1997 Asian currency crisis led to a rise in foreign currency loans' cost, and this placed a heavy burden on the overall macroeconomy. When the credit rate is downgraded, the demand for that country's bonds is generally decreased as the risk premium for them increases. This in turn causes costs for government debt to rise, thus presenting difficulties for the stable management of national finance.

Suggested Citation

  • Huh, In & An, Jiyoun & Yang, Dayoung, 2013. "The Rise of Korea's Credit Ratings after the Asian Currency Crisis: a Panel Analysis of Determinants," World Economy Brief 13-45, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwe:2013_045
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