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

Author

Listed:
  • 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.

Suggested Citation

  • 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.
  • Handle: RePEc:uct:uconnp:2002-32
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    References listed on IDEAS

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    1. Graciela L. Kaminsky & Carmen M. Reinhart, 2001. "Bank Lending and Contagion: Evidence from the Asian Crisis," NBER Chapters,in: Regional and Global Capital Flows: Macroeconomic Causes and Consequences, NBER-EASE Volume 10, pages 73-99 National Bureau of Economic Research, Inc.
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    3. 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.
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    5. Marcus Noland, 2000. "Avoiding the Apocalypse: The Future of the Two Koreas," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 94.
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    8. Steven Radelet & Jeffrey Sachs, 1998. "The Onset of the East Asian Financial Crisis," NBER Working Papers 6680, National Bureau of Economic Research, Inc.
    9. Yongil Jeon & Stephen Miller, 2005. "Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis," Global Economic Review, Taylor & Francis Journals, vol. 34(2), pages 145-165.
    10. 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: Macroeconomic Causes and Consequences, NBER-EASE Volume 10, pages 11-41 National Bureau of Economic Research, Inc.
    11. Aaron Tornell, 2001. "Lending Booms and Currency Crises: Empirical Link," NBER Chapters,in: Regional and Global Capital Flows: Macroeconomic Causes and Consequences, NBER-EASE Volume 10, pages 47-67 National Bureau of Economic Research, Inc.
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    1. repec:eee:riibaf:v:42:y:2017:i:c:p:559-571 is not listed on IDEAS
    2. 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.
    3. 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.
    4. Yang-Cheng Lu & Hao Fang & Shu-Lien Chang, 2013. "History of Credit Crisis as a Mirror: An International Perspective on the Impact of the Sub-Prime Crisis on the Performance of Investment and Commercial Banks," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 67-81, December.
    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, vol. 14(5), pages 351-360.
    6. 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.
    7. 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.
    8. Akbar, Saeed & Rehman, Shafiq ur & Ormrod, Phillip, 2013. "The impact of recent financial shocks on the financing and investment policies of UK private firms," International Review of Financial Analysis, Elsevier, vol. 26(C), pages 59-70.
    9. Songül KAKÝLLÝ ACARAVCI & Ahmet Ertugrul ÇALIM, 2013. "Turkish Banking Sector’s Profitability Factors," International Journal of Economics and Financial Issues, Econjournals, vol. 3(1), pages 27-41.

    More about this item

    Keywords

    Asian financial crisis; Korean commercial banks; profitability;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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