An origin of the financial crisis: The Korean case

Hakun Kim

Global Economic Review, 1998, vol. 27, issue 3, 3-13

Abstract: Financial policies taken as a strategic means for Korean economic development in the past have generated the crisis, putting the Korean economy into a Ponzi game. A Ponzi game implies an arrangement in which debts are backed not by real assets, but by future debts. Such arrangement has merit for the fact that the initial flow of resources from lenders to borrowers is not ultimately offset by a flow of equal value in the opposite direction. The result is then a continuous exceeding of interest payments over profit earnings.

Date: 1998
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DOI: 10.1080/12265089808449737

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