IDEAS home Printed from https://ideas.repec.org/p/inh/wpaper/2024-6.html
   My bibliography  Save this paper

International Reserves and Firm Investment: Identification through Bank Credit Reallocation

Author

Listed:
  • Woo Jin Choi

    (University of Seoul)

  • Ju Hyun Pyun

    (Korea University)

  • Youngjin Yun

    (Inha University)

Abstract

A central bank's accumulation of foreign reserves can reallocate domestic savings and influence investments across different firms. Leveraging institutional features in Korea and connecting firms to their lending banks for the 2004-2019, we examine how reserve accumulation and sterilization impact credit allocation within the banking system and firm investment. We track the bonds issued by the central bank to sterilize/fund reserve purchases. Different banks take varying amounts of sterilization bonds, and those more responsive adjust their loan supply to firms. As a result, firms heavily dependent on these banks for credit decrease investment during reserve accumulation.

Suggested Citation

  • Woo Jin Choi & Ju Hyun Pyun & Youngjin Yun, 2024. "International Reserves and Firm Investment: Identification through Bank Credit Reallocation," Inha University IBER Working Paper Series 2024-6, Inha University, Institute of Business and Economic Research.
    • Handle: RePEc:inh:wpaper:2024-6
    as

    Download full text from publisher

    File URL: https://drive.google.com/file/d/1RZaR7wYyHyLUwr5JKQNVkjkqD091CgcK/view?usp=sharing
    File Function: First version, 2024
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    international reserves; sterilized intervention; firm investment; bank balance sheet;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F31 - International Economics - - International Finance - - - Foreign Exchange

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inh:wpaper:2024-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Youngjin Yun (email available below). General contact details of provider: https://edirc.repec.org/data/deinhkr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.