Recent Theories Regarding Financial Contagion (in Korean)

Frederick Dongchuhl Oh () and Hyunjoon Lim ()
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Frederick Dongchuhl Oh: KAIST College of Business, Korea Advanced Institute of Science and Technology
Hyunjoon Lim: Secretariat of Monetary Policy Committee, The Bank of Korea

Economic Analysis (Quarterly), 2013, vol. 19, issue 3, 111-140

Abstract: This paper introduces studies that have attempted to make theoretical explanations on financial market shocks and contagion effects and explores their implications. As mechanisms of shock contagion and amplification, we introduce theory models focusing on portfolio readjustment; the limitation on investors' management and borrowing; changes in risk evading level, asymmetry and imperfection of information; debtor and creditor relations among banks; limited ability of investors in terms of collection and process of information; and homogenization of investor behavior. With these models, we try to identify mechanisms in the contagion of financial market shocks in recent times and explore their implications on policy alternatives.

Keywords: contagion; information asymmetry; rational inattention; rational homogenization (search for similar items in EconPapers)
JEL-codes: G01 G14 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:bok:journl:v:19:y:2013:i:3:p:111-140

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