• Title/Summary/Keyword: The Financial Crisis

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Volatility of Urban Housing Market and Real Estate Policy after the IMF crisis (도시 주택시장의 변동성과 부동산 정책의 한계 : IMF 위기 이후 서울을 중심으로)

  • Choi, Byung-Doo
    • Journal of the Korean association of regional geographers
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    • v.15 no.1
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    • pp.138-160
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    • 2009
  • The urban housing market in Korea, especially in Seoul and the Capital region, has been revitalized with massive urban (re)developments and expanding real estate finance after the IMF crisis. This brought about a boom of housing price during the mid-2000s, which has been virtually stabilized by strong regulation policies of the previous government. But with impacts of the recent international financial crisis together with some inherent problems, the housing market of Korea faces with a worry of collapse in relation with the financial market volatility and the serious depression of real economy, and hence the current government attempts to implement strong deregulation policies on the housing market. In this paper it is argued that this kind of volatility of urban housing market seems to be caused by strategies of capital which involve continuous massive urban (re)development, residential segregation and appropriation of monopoly rent(or capital gain), and fictitious capitalization of real estates and integration of real estate market and financial market. In these reasons, the current tendency of urban housing price shows a slow downward, which seems to give the current neoliberal government a rationale for deregulation policies to prevent the downward tendency. But this paper suggests that such a slow downward of housing price shift would have positive effects on the housing market in particular and social and economic situations in general, and hence an alternative housing policy is required to realize such positive effects.

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An Analysis of Capital Market Shock Reaction Effects in OECD Countries (OECD 회원국들의 자본시장 충격반응도 분석)

  • Kim, Byoung Joon
    • International Area Studies Review
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    • v.22 no.4
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    • pp.3-18
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    • 2018
  • In this study, I examined capital market shock reaction effects of 29 OECD countries with the past 24 years sample period consisting of daily stock market return using T-GARCH model focused on volatility feedback hypothesis. US daily stock market return is used as a unique independent variable in this model in consideration of its characteristics of biggest market share and as an origin country of Global Financial Crisis. As a result, France, Finland, and Mexico in order are shown to be the strongest countries in the aspect of return spillovers from US. Canada, Mexico, and France are shown to be the highest countries in the aspect of explanatory power of model. The degrees of shock reaction are proved to be higher in order in Germany, Chile, Switzerland, and Denmark and those of downside shock reaction are seen higher in order in Greece, Great Britain, Australia, and Japan. Canada and Mexico belonging to NAFTA are shown to be higher in the return spillover from US and in the model explanatory power, but they are shown to be lower in the impact of shock reaction, suggesting that regional distance effect or gravity theory cannot be applied to financial spillovers any longer. In the analysis of subsample period of Global Financial Crisis, north American three countries do not show any consistent results as in the full sample period but shock reaction in the European countries are shown to record stronger, suggesting that shocks from US in the Crisis Times are transferred mainly to European region.

Determinants of Corporate Loans and Bonds before and After Economic Crisis in Korea: Empirical Study on the Firm-level Data (경제위기 전후 기업대출시장 및 회사채시장의 결정요인: 미시적 실증연구)

  • Lim, Youngjae
    • KDI Journal of Economic Policy
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    • v.28 no.2
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    • pp.239-262
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    • 2006
  • The paper suggests that there has been a shift in the allocation of bank credit from large firms to small firms before and after the economic crisis. The paper also suggests that the improved lending practices of financial institutions, at least partially, contributed to this shift of corporate loans from large firms to small firms. Comparing the periods before and after the economic crisis also suggests that some important changes occurred to the corporate bond market. The effect of firm size on the corporate bond market differs before and after the economic crisis. Before the crisis, the larger the firms, the more they could borrow in the corporate bond market. However, after the crisis, it is not the case. The following interpretation could be put forward. Before the crisis, investors in the corporate bond market expected that the government would rescue large firms if they face the risk of bankruptcies. However, the collapse of Daewoo Group in 1999 shattered the TBTF (Too Big To Fail) myth of the public. The liquidity crisis of Hyundai Group in 2000-2001 reinforced the disintegration of the TBTF myth.

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The R&D Investment and Productivity Growth of Korean Economy in the New Normal Era (뉴 노멀 시대하 한국경제의 R&D투자와 생산성 성장)

  • Kim, Seon Jae
    • The Journal of the Korea Contents Association
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    • v.16 no.11
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    • pp.321-329
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    • 2016
  • The purpose of this study is to analyze the impact of R&D investment on productivity growth of the Korean Economy in the New Normal Era. To be specific, this study focuses on the impact of R&D capital, other capitals, and total factor productivity(TFP) on the labor productivity during the three periods: 1970-2014, 1970-1997, and 1999-2014. We found out that the change of the intensity in the R&D capital and other capitals significantly impacted on the change of the labor productivity in Korea. In particular, the estimated coefficients of these variables are higher after the period of the IMF financial crisis than before the crisis. We also estimated the marginal productivity of R&D capital investment in terms of the TFP growth. The estimated coefficients of the variables showed stronger effects after the period of the IMF financial crisis than before the crisis. As a result, the increase of R&D investment has been greatly impacted on the growth of the total factor productivity(TFP) after the IMF financial crisis in Korea.

The Impact of Horizontal Mergers on the Performance of the Jordanian Banking Sector

  • AL-HROOT, Yusuf Ali;AL-QUDAH, Laith Akram;ALKHARABSHA, Faris Irsheid
    • The Journal of Asian Finance, Economics and Business
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    • v.7 no.7
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    • pp.49-58
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    • 2020
  • This paper examines the impact of mergers on the financial performance of the Jordanian banking sector. This paper applies the financial approaches in analysing the effects of mergers on Jordanian banks' performance for two the periods: four years pre-merger and four years' post-merger for the period from 2001 to 2009. The sample of the study solely contains the case of the merger of the Jordan Ahli Bank (AHLI bank) with Philadelphia Bank in 2005. Data are tested for normality using the Shapiro-Wilk Test and Kolmogorov Smirnov test. The financial ratios and a statistical technique as a Mann-Whitney U test were used to assess the significant differences in the financial performance of the selected banks pre- and post-merger by investigating the performance-related financial ratio groups that are expressed by leverage, liquidity, efficiency, and cash flow ratio. The results show that there is an insignificant improvement in the ratios of AHLI bank in the period after the merger, except for the superior result provided by this study indicating that the leverage ratios improved significantly. The reason for the insignificant improvement in financial ratios may be that the post-merger period corresponds to the period of the global financial crisis that began in 2007.

The Effects of Intellectual Capital and Financial Leverage on Evaluating Market Performance

  • OBEIDAT, Samer;AL-TAMIMI, Khaled;HAJJAT, Emad
    • The Journal of Asian Finance, Economics and Business
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    • v.8 no.3
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    • pp.201-208
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    • 2021
  • This study aimed to identify the key factors that affect the financial market performance (Price-Earnings Model) through a sample of 35 public shareholding industrial companies on the Amman Stock Exchange for the period 2010-2019, using statistical models and methods, such as the Simple Linear Regression Model, Correlation Coefficient, and dispersion board. The study results showed the nonexistence of a statistically significant effect between the intellectual capital and market value added (MVA) and market performance. Results also showed a statistically significant positive effect between financial leverage (FL) and the market performance, where the interpreted variation reached 64%. It showed from the analysis results that the relationship between (MVA) and market performance (P/E) agrees with the study hypotheses, while the result related to (FL) disagrees with the study hypotheses. The study recommends that public shareholding industrial companies should focus more on intellectual capital and show its value in the annual financial statements and reports, and those companies that have high profitability and the chance to hold gains and profits should rely less on debt and more on retained earnings, due to the high risk of debt and in line with the present unstable circumstances in Jordan, especially in light of the global Covid-19 crisis.

Corporate Default Prediction Model Using Deep Learning Time Series Algorithm, RNN and LSTM (딥러닝 시계열 알고리즘 적용한 기업부도예측모형 유용성 검증)

  • Cha, Sungjae;Kang, Jungseok
    • Journal of Intelligence and Information Systems
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    • v.24 no.4
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    • pp.1-32
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    • 2018
  • In addition to stakeholders including managers, employees, creditors, and investors of bankrupt companies, corporate defaults have a ripple effect on the local and national economy. Before the Asian financial crisis, the Korean government only analyzed SMEs and tried to improve the forecasting power of a default prediction model, rather than developing various corporate default models. As a result, even large corporations called 'chaebol enterprises' become bankrupt. Even after that, the analysis of past corporate defaults has been focused on specific variables, and when the government restructured immediately after the global financial crisis, they only focused on certain main variables such as 'debt ratio'. A multifaceted study of corporate default prediction models is essential to ensure diverse interests, to avoid situations like the 'Lehman Brothers Case' of the global financial crisis, to avoid total collapse in a single moment. The key variables used in corporate defaults vary over time. This is confirmed by Beaver (1967, 1968) and Altman's (1968) analysis that Deakins'(1972) study shows that the major factors affecting corporate failure have changed. In Grice's (2001) study, the importance of predictive variables was also found through Zmijewski's (1984) and Ohlson's (1980) models. However, the studies that have been carried out in the past use static models. Most of them do not consider the changes that occur in the course of time. Therefore, in order to construct consistent prediction models, it is necessary to compensate the time-dependent bias by means of a time series analysis algorithm reflecting dynamic change. Based on the global financial crisis, which has had a significant impact on Korea, this study is conducted using 10 years of annual corporate data from 2000 to 2009. Data are divided into training data, validation data, and test data respectively, and are divided into 7, 2, and 1 years respectively. In order to construct a consistent bankruptcy model in the flow of time change, we first train a time series deep learning algorithm model using the data before the financial crisis (2000~2006). The parameter tuning of the existing model and the deep learning time series algorithm is conducted with validation data including the financial crisis period (2007~2008). As a result, we construct a model that shows similar pattern to the results of the learning data and shows excellent prediction power. After that, each bankruptcy prediction model is restructured by integrating the learning data and validation data again (2000 ~ 2008), applying the optimal parameters as in the previous validation. Finally, each corporate default prediction model is evaluated and compared using test data (2009) based on the trained models over nine years. Then, the usefulness of the corporate default prediction model based on the deep learning time series algorithm is proved. In addition, by adding the Lasso regression analysis to the existing methods (multiple discriminant analysis, logit model) which select the variables, it is proved that the deep learning time series algorithm model based on the three bundles of variables is useful for robust corporate default prediction. The definition of bankruptcy used is the same as that of Lee (2015). Independent variables include financial information such as financial ratios used in previous studies. Multivariate discriminant analysis, logit model, and Lasso regression model are used to select the optimal variable group. The influence of the Multivariate discriminant analysis model proposed by Altman (1968), the Logit model proposed by Ohlson (1980), the non-time series machine learning algorithms, and the deep learning time series algorithms are compared. In the case of corporate data, there are limitations of 'nonlinear variables', 'multi-collinearity' of variables, and 'lack of data'. While the logit model is nonlinear, the Lasso regression model solves the multi-collinearity problem, and the deep learning time series algorithm using the variable data generation method complements the lack of data. Big Data Technology, a leading technology in the future, is moving from simple human analysis, to automated AI analysis, and finally towards future intertwined AI applications. Although the study of the corporate default prediction model using the time series algorithm is still in its early stages, deep learning algorithm is much faster than regression analysis at corporate default prediction modeling. Also, it is more effective on prediction power. Through the Fourth Industrial Revolution, the current government and other overseas governments are working hard to integrate the system in everyday life of their nation and society. Yet the field of deep learning time series research for the financial industry is still insufficient. This is an initial study on deep learning time series algorithm analysis of corporate defaults. Therefore it is hoped that it will be used as a comparative analysis data for non-specialists who start a study combining financial data and deep learning time series algorithm.

Crisis Management Strategy for the Korean MICE Industry Using SWOT-AHP-TOWS Analysis

  • Kim, Yongsuk
    • Journal of Korea Trade
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    • v.25 no.6
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    • pp.34-56
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    • 2021
  • Purpose - This study presents strategies to overcome the COVID-19-induced crisis in Korea's meetings, incentives, conferences, and exhibitions (MICE) industry. It aims to quantitatively identify the environmental factors affecting the industry and their degree of influence, and derive optimal countermeasures. Design/methodology - The study applied the SWOT-AHP-TOWS framework. An AHP analysis was first performed within the SWOT frame, and then a TOWS analysis was conducted using the results of the SWOT-AHP analysis. In the AHP analysis, the number of pairwise comparison questions was limited to four for each SWOT factor to increase the consistency of responses by reducing the burden on respondents. Findings - The plunge in demand (threats factor) has had an overwhelming impact on the MICE industry, more than any other environmental factor. To overcome the crisis, the ST alternative that takes advantage of dynamic pop culture to minimize the business damage caused by the plunge in demand was the top priority measure. Based on the results, this study presents suggestions for overcoming the crisis in the MICE industry. First, the industry should develop profitable business models to supplement scarce financial resources by exploiting Korea's success with quarantine management. Second, the government must provide emergency relief funds or bailout support to protect MICE facilities and employees. Originality/value - Unlike previous work on the MICE industry, this study utilized the SWOT-AHPTOWS framework to derive quick research results in an abnormal situation. This approach can be expanded to other countries with different industrial environments and situations. Additionally, when applying this method to MICE sub-sectors, countermeasures should be tailored to each field.

A Study on the Financial Service Negotiations in the Korean-Chinese Free-Trade Agreement (FTA) with Respect to RMB Internationalization (위안화 국제화를 고려한 한·중 FTA 금융서비스 협상 전략에 관한 연구)

  • Kim, Sang-Su;Son, Sam-Ho
    • Journal of Distribution Science
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    • v.11 no.4
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    • pp.81-88
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    • 2013
  • Purpose - This paper analyzes the influence of the RMB internationalization on the KRW/dollar exchange rate using an autoregressive distributed lag model. Comparing the parameter estimators from the sample period before and after the global financial crisis, we found that the RMB/dollar exchange rate has increasingly become more influential on the KRW/dollar exchange rate. Moreover, for the past several years, the Chinese government has actively utilized the financial service FTA negotiation as a measure for the RMB internationalization. This paper simultaneously considers RMB internationalization and financial service negotiations in the Korean-Chinese FTA. The purpose of this paper is to explicitly suggest a direction for the financial service negotiations in the Korean-Chinese FTA considering the effects of RMB internationalization. Research design, data, and methodology - The research plan of this paper has two parts. First, for an empirical study, this paper uses the daily exchange rate of the U.S. dollar against the currencies of the ASEAN5, Taiwan,and Korea. By using an autoregressive distributed lag model, this paper studies the influence of the change in the RMB/dollar exchange rate on changes in the local currency/dollar exchange rate in seven economies neighboring China. Our sample periods are 06/2005 - 07/2008 and 06/2010 -02/2013. During these periods, China was under the multi-currency basket system. We exempted the period of 08/2008 - 05/2010 from the analysis because there was nearly no RMB/dollar exchange rate fluctuation during those months. Second, after analyzing the recent financial service liberalizations and deregulations in China, we recommend a direction for the financial service negotiations in the Korean-Chinese FTA. In the past several years,the main Chinese financial policy agenda has surrounded the RMB internationalization. Therefore, it is crucial to understand this in the search for strategies for the financial service negotiations in the Korean-Chinese FTA. This paper employs an existing literature survey and examines the FTA protocols in its research methodology. Results and Conclusions - After the global financial crisis, the Chinese government wanted to break away from the dollar influence and pursued independent RMB internationalization in order to continue the growth and stability of its economy. Hence, every neighboring economy of China has been strategically impacted by RMB internationalization. Nevertheless, there is little empirical study on the influence of RMB internationalization on the KRW/dollar exchange rate. This paper is one of the few studies to analyze this problem comprehensively. By using a relatively simple estimation model, we can confirm that the coefficient of the RMB/dollar exchange rate has become more significant, except in the case of Indonesia. Although Korea is not under the multi-currency basket system but under the weakly controlled floating exchange rate system, its coefficient appears as large as that of the ASEAN5. This is the basis of the currency cooperation that has grown from the expansion of trade between the two countries. These empirical results suggest that the Korean government should specifically consider the RMB internationalization in the Korean-Chinese FTA negotiations.

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The Effectiveness of Capital Controls and Macroprudential Measures

  • JUNYONG LEE;KYOUNGHUN LEE;FREDERICK DONGCHUHL OH
    • KDI Journal of Economic Policy
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    • v.45 no.4
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    • pp.1-22
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    • 2023
  • We review the literature on the effectiveness of capital controls and macroprudential measures. First, we explain the purposes and examples of capital controls and macroprudential policies. We then analyze various theoretical models and empirical findings from prior studies that investigate the effectiveness of each instrument. Moreover, we review several studies that directly compare the two instruments and discuss whether policymakers should implement capital controls or macroprudential measures to overcome financial crises. Finally, based on a discussion of the findings of previous studies, we suggest several possible avenues for future research.