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An Equity Market Perspective on the Korean Financial Crisis

Author

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  • Wook Sohn
  • Bobae Choi

Abstract

We examine the movement of Korean stock prices before and after the 1997 financial crisis. Unlike in Japan, as documented by Hamao et al. (Journal of Money, Credit and Banking, 39, pp. 901-923, 2007), we find an increase in firm-level volatility in Korea, which may make it easier for investors to distinguish low-quality from high-quality firms and thus encourage “cleansing” during recessions. The result appears to derive from government efforts to restructure the corporate sector, which targeted highly leveraged firms and chaebol affiliates immediately after the market crash.

Suggested Citation

  • Wook Sohn & Bobae Choi, 2010. "An Equity Market Perspective on the Korean Financial Crisis," Global Economic Review, Taylor & Francis Journals, vol. 39(1), pages 83-90.
    • Handle: RePEc:taf:glecrv:v:39:y:2010:i:1:p:83-90
    DOI: 10.1080/12265081003696403
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    Cited by:

    1. Anton V. Navoy, 2018. "Concept of the Exchange Rate Policy and Capital Control of the National Economy in Terms of Global Finance Instability," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 71-86, February.

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