Credit Allocation and Financial Crisis in Korea

February 1, 1999

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Eduardo Borensztein, and Jong-Wha Lee. Credit Allocation and Financial Crisis in Korea, (USA: International Monetary Fund, 1999) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bank credit, Credit, Economic sectors, External debt, Financial institutions, Financial sector, Loans, Money

Keywords: Accounting profit, Bank credit, Chaebol firm, Credit, Credit allocation, Credit availability, Credit guarantee funds, Credit policy, Curb market rate, Debt ratio, East Asia, Financial Crisis, Financial Markets, Financial sector, Firm, Foreign currency, Loan, Loan market, Loans, Market share, Profit rate, Short-term debt, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/020
Stock No:

WPIEA0201999
ISBN:

9781451843828
ISSN:

1018-5941

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