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Investment and financing constraints around the Korean financial crisis

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  • Investment and financing constraints around the Korean financial crisis
  • Kim, Jong Hun
  • Vanderbilt University


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Title Investment and financing constraints around the Korean financial crisis
Similar Titles
Material Type Reports
Author(English)

Kim, Jong Hun

Publisher

Nashville:Vanderbilt University

Date 2006-10
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Economic Conditions
Economy < Direct Investment
Holding Vanderbilt University

Abstract

This paper examines investment behavior and the effects of financing constraints among Korean manufacturing companies before and after the 1997 financial crisis using a firm-level panel data. I estimate the Q and sales accelerator models considering the possibility of cash constraint of investment by categorizing firms based on their age, size and affiliations to the Korean industrial conglomerates (i.e., chaebols). The results indicate that Q becomes a key determinant of investment decision while the sales variable becomes less important after the crisis began. Q remains to be important for bigger and more mature firms even after the 1997 crisis and becomes significant to smaller and relatively younger ones. It suggests that there could have been a shift from the quantity (sales) to the quality (Q) as the key component of firm’s investment. (The rest omitted)