Financial Crisis and Credit Crunch in Korea: Evidence From Firm-Level Data

Author/Editor:

Jong-Wha Lee ; Eduardo Borensztein

Publication Date:

January 1, 2000

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 the credit crunch following the recent financial crisis in Korea. Using enterprise-level data, we find that there were big differences in the magnitude of the credit contraction across different types of firms. In particular, chaebol (conglomerate)-affiliated firms appeared to have lost the preferential access to credit they enjoyed in the pre-crisis period, and credit appears to have been reallocated in favor of more efficient firms. This suggests that the credit crunch suffered by certain sectors can be attributed to the adjustment by banks and enterprises to the restructuring of the financial sector, rather than to tight monetary policy or an external credit constraint.

Series:

Working Paper No. 2000/025

Subject:

Bank credit Banking Credit Financial crises Financial institutions Financial services Loans Money Real interest rates

English

Publication Date:

January 1, 2000

ISBN/ISSN:

9781451844252/1018-5941

Stock No:

WPIEA0252000

Pages:

28

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