콘텐츠 바로가기
로그인
컨텐츠

Category Open

Resources

tutorial

Collection of research papers and materials on development issues

home

Resources
Economy Macroeconomics
Economy Financial Policy

Print

Finance and Economic growth in Korea

Related Document
Frame of Image financial repression in Korea seems to have worked positively on financial development and economic growth. In a subsequent paper, Demetriades and Luintel (2001) argue that financial restraint in Korea had a positive effect on financial development, their reasoning being that the banking system in Korea was a mono-bank cartel and government control over interest rates had a corrective effect on the monopoly market failure and thus a positive effect on the size of bank deposits and loanable funds. Given that this financial deepening, measured as the ratio of commercial bank deposits to nominal GDP or some other similar measure, took place when the Korean economy was growing rapidly, their implicit message is that financial restraint had a positive effect on Korea’s economic growth. In an empirical study on 16 emerging economies, which includes Korea, Demetriades and Hussein (1996), however, show that the relationship between financial development and economic growth is bi-directional, its
1
.
Ever since the contribution by McKinnon (1973) and Shaw (1973) to the literature on finance and economic
development, it was widely accepted in the literature that in a financially repressed system, where the government maintained artificially low interest rates and controlled credit allocation, savings would be less and credit misallocated with a detrimental effect on economic growth.
1
causal direction depending on country-specific factors. This is not surprising, given that what matter


Full Text
Title Finance and Economic growth in Korea
Similar Titles
Material Type Reports
Author(English)

Kim, Joon-Kyung

Publisher

[Seoul]:KDI School of Public Policy and Management

Date 2009-05
Pages 57
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Economy < Financial Policy
Holding KDI; KDI School of Public Policy and Management