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Credit Allocation and Financial Crisis in Korea

Author

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  • Mr. Eduardo Borensztein
  • Jong-Wha Lee

Abstract

This paper analyzes some of the structural problems associated with the Korean financial sector, and investigates whether the financial system has allocated credit in an efficient way over the past three decades. Using data for 32 manufacturing sectors, we find no evidence that credit flows were directed to the relatively more profitable sectors, either before or after the financial reforms. We also find that the flow of credits did not contribute to improve the economic performance of the favored industries over time.

Suggested Citation

  • Mr. Eduardo Borensztein & Jong-Wha Lee, 1999. "Credit Allocation and Financial Crisis in Korea," IMF Working Papers 1999/020, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1999/020
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    Citations

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    Cited by:

    1. Saini, Seema & Ahmad, Wasim, 2024. "Credit creation, credit destruction and credit reallocation: Firm-level evidence from India," Journal of Asian Economics, Elsevier, vol. 92(C).
    2. Philippe DULBECCO & Jean-Pierre ALLEGRET & COURBIS, 1999. "Financial Liberalisation and Stability of the Financial System in Emerging Markets: the institutional dimension of financial crises," Working Papers 199918, CERDI.
    3. Harvie, Charles & Lee, Hyun-Hoon, 2005. "Korea's Fading Economic Miracle 1990-97," Economics Working Papers wp05-09, School of Economics, University of Wollongong, NSW, Australia.
    4. Jean-Claude Berthelémy & Sophie Chauvin, 2000. "Structural Changes in Asia and Growth Prospects After the Crisis," Working Papers 2000-09, CEPII research center.
    5. Kang-Kook Lee & James Crotty, 2001. "Economic Performance in Post-Crisis Korea: A Critical Perspective on Neo-Liberal Restructuring," Working Papers wp23, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Lee, Bong-Soo & Min, Byung S., 2011. "Exchange rates and FDI strategies of multinational enterprises," Pacific-Basin Finance Journal, Elsevier, vol. 19(5), pages 586-603, November.
    7. Hyesung Kim & Almas Heshmati & Dany Aoun, 2006. "Dynamics of Capital Structure: The Case of Korean Listed Manufacturing Companies," Asian Economic Journal, East Asian Economic Association, vol. 20(3), pages 275-302, September.
    8. Sherry L. Kiser & Jahyeong Koo, 2001. "Recovery from a financial crisis: the case of South Korea," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q IV, pages 24-36.
    9. Yong Jin Kim & Jong‐Wha Lee, 2006. "A Model Of Self‐Fulfilling Financial Crises," The Japanese Economic Review, Japanese Economic Association, vol. 57(1), pages 87-100, March.
    10. Nunnenkamp, Peter, 2000. "Boom, bust, recovery – What next in private capital flows to emerging markets?," Kiel Discussion Papers 362, Kiel Institute for the World Economy (IfW Kiel).
    11. James Crotty & Kang-Kook Lee, 2005. "From East Asian “Miracle” to Neo-liberal “Mediocrity”: The Effects of Liberalization and Financial Opening on the Post-crisis Korean Economy," Global Economic Review, Taylor & Francis Journals, vol. 34(4), pages 415-434.
    12. Kang-Kook Lee & James Crotty, 2005. "The Effects of Neoliberal "Reforms" on the Post-Crisis Korean Economy," Working Papers wp111, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. Jean-Pierre Allegret & Bernard Courbis & Philippe Dulbecco, 2003. "Intermédiation et stabilité financière dans les marchés émergents," Post-Print hal-01660189, HAL.
    14. Laeven, Luc, 2002. "Financial constraints on investments and credit policy in Korea," Journal of Asian Economics, Elsevier, vol. 13(2), pages 251-269.
    15. Sungsup Ra, 2005. "Bad Credit Equilibria with the Abnormally Utilized Commerical," Finance 0503012, University Library of Munich, Germany.

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