Credit Allocation and Financial Crisis in Korea

IMF Working Papers, February 1, 1999

Source details

This paper analyzes structural problems associated with the Korean financial sector and investigates whether the financial system allocated credit efficiently over the past three decades.
Methodology: Uses data for 32 manufacturing sectors to assess credit allocation patterns and their effects on sectoral performance.
Authors: Eduardo Borensztein, Jong-Wha Lee
Date: February 1, 1999

No evidence that credit flows were directed to the relatively more profitable sectors, either before or after the financial reforms.
The flow of credits did not contribute to improve the economic performance of the favored industries over time.

Examination of credit allocation efficiency across 32 manufacturing sectors.
Structural problems in the Korean financial sector as they relate to credit allocation.
Evaluation of the impact of financial reforms on sectoral credit flows and sectoral performance.

Subjects: 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

Credit Allocation and Financial Crisis in Korea - WP/99/20
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