The Rise of Korea's Credit Ratings after the Asian Currency Crisis: a Panel Analysis of Determinants

In Huh (), Jiyoun An () and Dayoung Yang ()
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In Huh: Korea Institute for International Economic Policy
Jiyoun An: Kyunghee University
Dayoung Yang: Korea Institute for International Economic Policy

No 13-45, World Economy Brief from Korea Institute for International Economic Policy

Abstract: The fluctuations of credit ratings can make a considerable impact on a nation's finance and economy. Moody's 9-notch downgrading of the Korea's credit rating from A1 to B- during the 1997 Asian currency crisis led to a rise in foreign currency loans' cost, and this placed a heavy burden on the overall macroeconomy. When the credit rate is downgraded, the demand for that country's bonds is generally decreased as the risk premium for them increases. This in turn causes costs for government debt to rise, thus presenting difficulties for the stable management of national finance.

Keywords: Credit Rate; Per Capita Earning; National Debt (search for similar items in EconPapers)
Pages: 5 pages
Date: 2013-10-11
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