An Empirical Evaluation of Macro-Prudential Measures in Korea: Focusing on Debt Inflows

In Huh () and Jiyoun An ()
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In Huh: Chonnam National University 77 Yongbong-ro, Buk-gu, Gwangju Republic of Korea
Jiyoun An: Kyung Hee University 1732 Deogyoung-daero, Giheung-gu, Yongin-si Republic of Korea

Asian Economic Papers, 2014, vol. 13, issue 2, 68-85

Abstract: This study empirically evaluates whether Korea's recent macroprudential measures have been effective either in reducing the volume of debt inflows or in altering their composition. Since 2010 Korea sequentially imposed three measures to provide financial market stability: limits on foreign exchange forward positions, the revival of a tax on foreign bond holdings, and a macroprudential levy. Overall, we find that these measures reduced the volume of debt inflows related to debt securities and short-term loans. The results remain constant over the entire sample period, although our findings are results with short-term data sample until December 2012.

Date: 2014
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