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Financial supervision of merchant banking corporations as a cause of Korea’s currency crisis

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  • Financial supervision of merchant banking corporations as a cause of Korea’s currency crisis
  • Choi, Doo-Yull; Lee, Yeonho
  • The Association of Korean Economic Studies


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Title Financial supervision of merchant banking corporations as a cause of Korea’s currency crisis
Similar Titles
Material Type Articles
Author(English)

Choi, Doo-Yull; Lee, Yeonho

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2006
Journal Title; Vol./Issue The Journal of the Korean Economy:vol. 7(no. 1)
Pages 42
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Holding AKES

Abstract

This study investigates the ineffectiveness in the financial regulations and supervision of Korea’s merchant banking corporations (MBCs) prior to the 1997 currency crisis, whose behavior is thought to trigger a vicious circle of credit contraction from Korea’s MBCs to conglomerates. The study is based on the presumption that large parts of MBCs’ business behavior are endogenously determined under the given financial regulations and supervision system. The main point of this study is that the financial regulations and supervisory system surrounding MBCs were very much out-dated and ineffective. In particular, MBCs were supervised based on an anachronistic paradigm that foreign and domestic currency businesses undertaken by financial institutions were distinctively separate from each other. This is a good example showing the dangers when institutions and cognition do not catch up with changing circumstances. (The rest omitted)