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Financing growth without banks : Korean housing repo contract

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  • Financing growth without banks
  • Kim, Se-Jik; Shin, Hyun Song
  • Seoul National University


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Title Financing growth without banks
Similar Titles
Sub Title

Korean housing repo contract

Material Type Reports
Author(English)

Kim, Se-Jik; Shin, Hyun Song

Publisher

[Seoul]:Seoul National University

Date 2011-08
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Economy < Economic System
Holding Princeton University

Abstract

Imperfect financial intermediation is a key bottleneck in economic development. Korea’s unique Jeonse or housing repo contract channels funds directly from tenant/lenders to landlord/entrepreneurs, bypassing the banking system. In a housing repo, the landlord/entrepreneur puts up the house as collateral when borrowing from the tenant/lender. The lender’s loan is secured by living in the collateral asset, lowering the cost of capital and increasing credit. Jeonse has been the dominant form of rental contract in Korea, and has served as a mode of direct debt financing that by-passes the banking sector.