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Journal Article
Recovery from a financial crisis: the case of South Korea
Among the countries that were impacted by the 1997 Asian crisis, South Korea (Korea hereafter) has demonstrated the fastest recovery by blocking its downward spiral. Jahyeong Koo and Sherry Kiser examine the recovery process of financial crises, particularly in Korea, in light of the weak-fundamentals and financial-panic views. Since neither of these views adequately explains Koreas recovery, the authors look at other phenomena for an explanation. Alternative financial arrangements and labor market adjustments are specifically examined. The authors acknowledge that Koreas recovery was only ...
Working Paper
Korean banks' responses to the strengthening of capital adequacy requirements
The purpose of this paper is to examine Korean banks' responses to the Basle risk-weighted capital adequacy requirements implemented in 1993. The analysis indicates that while some cosmetic adjustments might have been made by partial recognition of unrealized stock losses and expected loan losses, efforts to increase capital in ways that effectively reduced risk exposure seemed to dominate the response to strengthened capital requirements. The analysis also suggests the advisability of supplementing risk-based capital requirements with leverage restrictions. The analysis also raises the ...
Working Paper
An examination of the market valuation effects of financial reform in Korea
This paper uses an event-study methodology to examine the wealth effects of Korea's recent move toward financial market liberalization. A government plan finalized in 1993 calls for further interest rate deregulation, greater autonomy for managers of financial institutions, and a blurring of the distinction between commercial banks, investment banks, and insurance companies. These changes will have complex and offsetting effects on the profitability of financial institutions, as they represent a combination of increased opportunity, which should enhance profitability, and increased ...
Working Paper
Deregulation and efficiency: the case of private Korean banks
This paper examines the productive efficiency of a sample of private Korean banks over the 1985 to 1995 time period. The goal of the analysis is to identify the key determinants of Korean bank efficiency (inefficiency) following the program of deregulation initiated by the government in the early 1980s and augmented in the early 1990s. Using the stochastic frontier cost function approach, efficiency scores were determined for each bank in the sample. A second stage efficiency regression was then estimated to identify the key determinants of operating efficiency. In general, the results show ...