Excess Credit and the South Korean Crisis
Panicos Demetriades () and
No RP2006-84, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)
We provide a novel empirical analysis of the South Korean credit market that reveals large volumes of excess credit since the late 1970s, indicating that a sizeable proportion of total credit was being used to refinance unprofitable projects. Our findings are consistent with theoretical literature that suggests that soft budget constraints and overborrowing were significant factors behind the Korean financial crisis of 1997-98.
Keywords: Budget deficits; Credit; Financial crisis; Loans; Foreign (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:unu:wpaper:rp2006-84
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