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Regional segregation of financial markets in Korea

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  • Regional segregation of financial markets in Korea
  • Koo, Jaewoon; Moon, Ho Seong
  • The Bank of Korea


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Title Regional segregation of financial markets in Korea
Similar Titles
Material Type Articles
Author(English)

Koo, Jaewoon; Moon, Ho Seong

Publisher

[Seoul]:The Bank of Korea

Date 2004
Journal Title; Vol./Issue Economic Paper:vol. 7(no. 2)
Pages 16
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Territorial Development < National Land Development
Holding The Bank of Korea

Abstract

Contrary to the conventional view that financial markets are integrated nation-wide, we find evidence for the regional segregation of financial markets in Korea. Because of legal restrictions and the asymmetry of information in financial markets, funds seen to be imperfectly mobile across regions. Using the annual data for eleven regions during 1985-2001, we find that deposits are positively associated with loans at the regional level. This implies that financial markets are regionally segregated. Banks have greater locality than non-bank financial institutions. The degree of regional segregation, however, has been decreasing after the IMF crisis, implying that financial markets are tending to become more integrated.