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Financial Crisis and Credit Crunch in Korea: Evidence From Firm-Level Data
Author:
Jong-Wha Lee null

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Mr. Eduardo Borensztein
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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 025
Language:
English
Publication Date:
01 Jan 2000
DOI:
https://doi.org/10.5089/9781451844252.001
ISBN:
9781451844252
ISSN:
1018-5941
Pages:
28
Keywords:
WP; credit crunch; profit; profit rate; Korea; financial crisis; credit contraction; flight to quality; bank credit variable; overnight rate; tightening credit condition; short-term debt; credit allocation; Credit; Bank credit; Loans; Real interest rates
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund