Credit Allocation and Financial Crisis in Korea

Author/Editor:

Eduardo Borensztein ; Jong-Wha Lee

Publication Date:

February 1, 1999

Electronic Access:

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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.

Series:

Working Paper No. 1999/020

Subject:

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

English

Publication Date:

February 1, 1999

ISBN/ISSN:

9781451843828/1018-5941

Stock No:

WPIEA0201999

Pages:

37

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