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Crisis and Creative Destruction: Cases of Korean and Japanese Stock Markets

Shumpei Takemori and Kenji Wada

Asia-Pacific Financial Markets, 2003, vol. 10, issue 4, 317 pages

Abstract: In this essay, we investigate the contrasting performance of Korean and Japanese stock markets before and after the East Asian currency crisis. The Korean stock markets showed a sharper decline and a faster recovery than the Japanese stock markets. First, we theoretically explain these contrasting movements of stock markets by explicitly modeling and adding some new elements to the idea of IT revolution in Greenwood and Jovanovic (Amer. Econom. Rev. 89, 1999, 116–122). Then we empirically prove that the theoretical model in this paper has some quantitative support by considering the level of monthly stock market capitalization and the return on daily stock index in Korea and Japan. Copyright Springer Science + Business Media, Inc. 2003

Keywords: Asian currency crisis; Japanese economic recession; IT revolution; KOSPI; TOPIX; KOSDAQ; JASDAQ (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1007/s10690-005-4237-8

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