Financing Growth without Banks: Korean Housing Repo Contract

Hyun Song Shin and Se-Jik Kim
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Se-Jik Kim: Seoul National University

No 328, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: Imperfect financial intermediation is a key bottleneck in economic development. Korea's unique Jeonse or housing repo contract channels funds directly from tenant/lenders to landlord/entrepreneurs, by-passing the banking system. In a housing repo, the landlord/entrepreneur puts up the house as collateral when borrowing from the tenant/lender. The lender's loan is secured by living in the collateral asset, lowering the cost of capital and increasing credit. Jeonse has been the dominant form of rental contract in Korea, and has served as a mode of direct debt financing that by-passes the banking sector.

Date: 2013
New Economics Papers: this item is included in nep-dge and nep-ure
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