• The Korean Journal of Financial Management
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• v.26 no.2
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• pp.63-91
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• 2009

This paper tests the validity of pecking order theory by Myers(1977) and Myers and Majluf(1984) on Korean manufacturing firms listed in the KRX for the years of 1994 to 2003. We also want to see if there is any difference in financing behavior between chaebol affiliated firms and non-chaebol affiliated firms. We develop testable hypotheses from the idea that established relationship between bank and firm mitigates the problem of information asymmetry (Kang and Lim, 2001), and thus makes it easier for firms to raise funds through banks. The test result of the first stage shows that firms prefer cash reserves to debt financing, and prefer debt to equity. Chaebol affiliated firms are found to behave as if they already exploit internal capital markets. The second stage of the test carried out by dividing debt capital into bank loans and corporate bonds also shows a consistent pattern of financing behavior. Firms are testified to prefer cash to bank loans, bank loans to corporate bonds, and corporate bonds to equity. In this case chaebol affiliation seems to make firms behave as if they already establish internal capital markets. Further analysis shows that some, though not in every case, difference of ordering around the occasion of Korean financial crisis exists. It may be from the change of attitude of Korean firms to risk, or from weakened influence of internal capital market along with strengthened market power in the post-crisis period.

• The Journal of the Korea Contents Association
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• v.21 no.9
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• pp.771-789
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• 2021

This study aims to examine the experiences and behaviors of youth's stock investment with credit loans. Using a qualitative case study method (Creswell, 2015), we interviewed 7 young investors. As a result of the analysis, based on the research method within the case, it was possible to find out the process and reasons for how the participants had credit loan experience and invested in stocks. In addition, 19 common categories could be derived from this. Further analyses classified the process as "start of stock investment", "immersion into the investment", "stock investment through credit loans", and "consequence of stock investment with credit loans". The study concludes with several policy implications and suggestions for future studies.

• The Journal of the Convergence on Culture Technology
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• v.8 no.1
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• pp.435-440
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• 2022

This study analyzed the impact of changes in real estate prices on the soundness of Korean banks using multiple regression models. As a result of the analysis, changes in real estate prices significantly increase the banks' non-performing loans through the increase in loans. Among macroeconomic variables, short-term interest rates were found to have a significant effect on all soundness indicators such as BIS capital adequacy ratio, non-performing loans ratio, and liquidity coverage ratio. Among the bank characteristics indicators, the loan growth rate had a significant negative effect on BIS capital adequacy ratio, and the real estate mortgage rate had a significant positive effect. In additional, it was found that non-performing loans ratio and liquidity coverage ratio had a negative effect on BIS capital adequacy ratio.

• KDI Journal of Economic Policy
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• v.13 no.1
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• pp.35-63
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• 1991

Currently, Korea's banking industry holds a sizable amount of non-performing loans which stem from the government-led bailout of many troubled firms in the 1980s. Although this burden was somewhat relieved with the aid of banks' recapitalization in the booming securities market between 1986-88, the insolvent credits still resulted in low profitability in the banking sector and have been detrimental to the progress of financial liberalization and internationalization. This paper surveys the corporate bailout experiences of major advanced countries and Korea in the past and derives a rationale for readjustment measures against non-performing loans, in which rescue plans depend on the nature of the financial system. Considering the features of Korea's financial system and the banking sector's recent performance, it discusses possible means of liquidation in keeping with the rationale. The conflict of interests among parties involved in non-performing loans is widely known as one of the major constraints in writing off the loans. Specifically, in the case of Korea, the government's excessive intervention in allocating credits has preempted the legitimate role of the banking sector, which now only passively manages its past loans, and has implicitly confused private with public risk. This paper argues that to minimize the incidence of insolvent loan readjustment, the government's role should be reduced and that the correspondent banks should be more active in the liquidation process, through the market mechanism, reflecting their access to detailed information on the troubled firms. One solution is that banks, after classifying the insolvent loans by the lateness or possibility of repayment, would swap the relatively sound loans for preferred stock and gradually write off the bad ones by expanding the banks' retained earnings and revaluing the banks' assets. Specifically, the debt-equity swap can benefit both creditors and debtors in the sense that it raises the liquidity and profitability of bank assets and strengthens the debtor's financial structure by easing the debt service burden. Such a creditor-led or market-led solution improves the financial strength and autonomy of the banking sector, thereby fostering more efficient resource allocation and risk sharing.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.6
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• pp.9-18
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• 2020

This study seeks to analyze the effect of Non-Performing Loans and Capital Adequacy Ratio on Return on Assets on ten conventional banks listed on the Indonesia Stock Exchange (BEI-IDX). This study uses secondary panel data for 2015-2019 in the form of CAR and NPL values from ten conventional banks listed on the BEI-IDX during the 2020 observation period. The research approach is quantitative descriptive with data analysis methods, namely, linear regression. The testing phase of this study includes: transform value, F-test, T-test and hypothesis test with significancy level sig < 0.05. The results of this study reveal that Non-Performing Loans had a significant negative effect (t = -2,637) (0.011 <0.0) on Return on Assets, while Capital Adequacy Ratio has no significant effect on ROA (0.760 > 0.05). R2 value is 0.128 or 12.8%. It has a significant effect on variables, calling efforts by banks, governments, and authorities monetary of related institutions to maintain the stability of finance. The reduction of Non-Performing Loan impacts on assets and capital adequacy ratio, besides, the normal NPL will control the stability of finance. If a balance is created either in the form of values or amounts of the variables, the reduction in Non-Performing Loans will be controlled.

• Journal of Labour Economics
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• v.37 no.4
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• pp.89-112
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• 2014

This paper characterizes an optimal combination of grant and income-contingent loans (ICL) from efficiency and equity points of view as a government subsidy program for higher-education. In particular, we show that it is always desirable to introduce ICL for students regardless of their household incomes, and also provide arguments for the superiority of tax-financing system to loans with risk-premium as a financing mechanism of ICL. From policy point of view, this paper suggests a need for the extended coverage of our ICL system, while justifying its current tax-financing system.

• Korea Journal of Hospital Management
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• v.11 no.4
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• pp.19-36
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• 2006

This study aims to examine the influence of growth rate, profitability and current ratio, which are confronted with static trade-off theory and pecking order theory, on capital structure of superior hospital and bankrupt hospital. Firstly, superior hospitals show positive correlation between growth rate and short-term loans, long-term loans, and short-term liabilities while bankrupt hospitals represent negative correlation. Superiority hospital and bankruptcy hospital show different financing behaviors, especially, short-term loan is the significant characteristic that discriminates between superior hospital and bankrupt hospital. Secondly, this paper studied the correlation between profitability and short-term loan, which the superior hospitals shows negative correlation, to contrast, bankrupt hospital have positive correlation. Consequently, the short-term loan is the most distinguishable factor between the superior hospital and bankrupt hospitals in terms of profitability. To conclude, this study shows that excess short-term loans can be the most important cause for hospital's bankrupt. Accordingly, strategic and effective policy about the short-term loan will be required in order to protect hospital's bankrupt.

• The Journal of the Institute of Internet, Broadcasting and Communication
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• v.21 no.5
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• pp.189-195
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• 2021

This paper discusses choice of loans problem(CLP) that is to minimize annual payment from which bank's borrows in multi-banks multi-nations with distinct interests. For the CLP, there is impossible to obtain the optimal solution actually without the help of mathematical software package as linear programming(LP). This paper applies the method used in transportation problem(TP) that finds initial feasible solution with selects minimum interest first, least cost method(LCM), to CLP. Result of experiment, the proposed algorithm can be obtains the optimal solution with at most two exchange optimization for LCM's initial feasible solution.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.12
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• pp.95-105
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• 2021

A prerequisite of a sound financial system is effective channeling of financial resources to efficient users; hence maximizing economic and societal welfare. To that end, the prevalence of bad loans in banks in emerging economies is a major policy concern. In an attempt to add to the growing body of literature explaining the interrelationship between macroeconomic and firm-specific factors, and non-performing loans (NPL), this paper examines data from 24 scheduled commercial banks in Bangladesh from 2008 to 2019. Macroeconomic factors as well as firm-specific factors related to profitability, capital strength, and efficiency are considered. Panel data regression analysis is performed to estimate pooled OLS, fixed effects, and random effects models. Following the necessary testing, it was found that the fixed effects model with robust standard error is appropriate. Results show that return on assets and inflation have a negative influence on NPL, but GDP growth has a favorable impact. The paper concludes by asserting that the evidence supports similar findings from studies both in Bangladesh and elsewhere and it is noted that a combination of these macroeconomic and firm-specific factors explains only a small portion of the total variation in NPL.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.2
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• pp.923-931
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• 2021

The aim of the present study is to analyze the financial performance of converted commercial bank from non-banking financial institution through a case study of Bangladesh Commerce Bank Limited as sample organization. It is observed that the bank is able to achieve a stable growth rate in total deposits, total loans and advances, and net income after tax during the period of 2015-2019. Researchers also calculated some ratio analysis and noticed that the financial position of Bangladesh Commerce Bank Limited was not so strong because bank's ROA, ROE, NIM and other ratios were below standard. Researchers used secondary data that were examined by using descriptive statistical tools and panel data regression model. Result shows that Bangladesh Commerce Bank has satisfactory operating efficiency, assets management efficiency, and gives loans to customers. In addition, the present study has tested some hypotheses regarding net income after tax, ROA and ROE with total assets, total loans, total deposits and interest income. These hypotheses have been accepted, which means there is no significant influence of the independent variable on the dependent variable. The study suggests that Bangladesh Commerce Bank Limited had the opportunities to make their financial position stronger by utilizing their good financial position and management efficiencies.