• KDI Journal of Economic Policy
• /
• v.46 no.1
• /
• pp.91-129
• /
• 2024

The Bank of Korea, through a legal amendment in 2011 following the financial crisis, was entrusted with the additional responsibility of financial stability beyond its existing mandate of price stability. Since then, concerns have been raised about the prolonged increase in household debt compared to income conditions, which could constrain consumption and growth and increase the possibility of a crisis in the event of negative economic shocks. The current accumulation of financial imbalances suggests a critical period for the government and central bank to be more vigilant, ensuring it does not impede the stable flow of our financial and economic systems. This study examines the applicability of the Integrated Inflation Targeting (IIT) framework proposed by the Bank for International Settlements (BIS) for macro-financial stability in promoting long-term economic stability. Using VAR models, the study reveals a clear increase in risk appetite following interest rate cuts after the financial crisis, leading to a rise in household debt. Additionally, analyzing the central bank's conduct of monetary policy from 2000 to 2021 through DSGE models indicates that the Bank of Korea has operated with a form of IIT, considering both inflation and growth in its policy decisions, with some responsiveness to the increase in household debt. However, the estimation of a high interest rate smoothing coefficient suggests a cautious approach to interest rate adjustments. Furthermore, estimating the optimal interest rate rule to minimize the central bank's loss function reveals that a policy considering inflation, growth, and being mindful of household credit conditions is superior. It suggests that the policy of actively adjusting the benchmark interest rate in response to changes in economic conditions and being attentive to household credit situations when household debt is increasing rapidly compared to income conditions has been analyzed as a desirable policy approach. Based on these findings, we conclude that the integrated inflation targeting framework proposed by the BIS could be considered as an alternative policy system that supports the stable growth of the economy in the medium to long term.

• Journal of Korea Port Economic Association
• /
• v.35 no.2
• /
• pp.1-20
• /
• 2019

This study aims to establish a method for activating Korean ship finance through an analysis on the development of Chinese ship finance market, which has grown rapidly in recent years. It focuses on its main institutions, laws and policies, strengths and weaknesses, market share, and development status. Because 80.7% of South Korea's economy depends upon foreign trade and 99.7% of the South Korea's traded volume is transported by ships, shipping has assumed an important role in Korean economy. However, since the global financial crisis, Korean shipping and shipbuilding industry has been facing difficulties and Hanjin, the biggest Korean shipping company, went bankrupt in 2017. One of the key aspects of the competitiveness of the shipping and shipbuilding industry is acquiring competitive shipping assets; therefore, stable and smooth supply of ship finance is crucial for the development of the shipping and shipbuilding industry. Given this background, the study analyzed how the Chinese ship finance market has grown rapidly in the past 30 years and identified the problems, strengths, and weaknesses of the Chinese ship finance. The analysis on the status of the Chinese ship finance market is expected to suggest a direction for establishing methods for activating the Korean ship finance market, which is facing scarcity of finance, even as the global ship finance market has remained depressed since the global financial crisis. Although this study focused exclusively on the Chinese market, future research can draw conclusions from a comparative analysis that includes the Japanese ship finance market; the conclusions obtained would contribute to the establishment of long-term policies and plans for Korean ship finance.

• Korean Management Science Review
• /
• v.34 no.3
• /
• pp.15-41
• /
• 2017

The purpose of this study is to analyze the effects of the BSCs of 642 firms excluding the financial and insurance companies listed on KOSPI. The analysis of financial performance through analysis of major financial ratios between BSC and non-BSC firms is compared with the input of human and material resources for business growth. We will promote the spread of BSC and examine the areas differentiated performance improvement. The analytical categories are manufacturing, service, wholesale and retail, and information and communications, which are 2,136 business years out of 2,378 final analytical samples. The results of the analysis are as follows. As a result of the analysis, among the four industries analyzed, the industries that showed the best performance were manufacturing. In the case of service industry, growth and activity were lower than those of non-adoption (NA) companies, but the operating margin was significantly different from manufacturing. However, market value was higher than that of NA companies, and R&D expenditures and advertising expenses were significantly higher than NA firms. On the other hand, there was no significant difference in profitability between the BSC and NA firms, but the market value was very significant. EPS is 5.22 times, BPS is 5.64 times, PBR is 1.3 times, and EVA is 35 times higher. In addition, R&D expenditure and advertising expenditure are more than twice as high as those of NA. In the case of the service industry, there is no significant difference in the growth performance from the NA firms. Activity indicators, BSC introduced companies are three times lower than both the total assets turnover and the capital turnover rate. The operating profit margin was high at 45.8% for introduced companies and 37.2% for non-introduced companies. In market value analysis, only BPS was 1.68 times higher. On the other hand, investment in welfare expenses is 0.2% of total assets, which is relatively low compared to NA firms. However, research and development expenses and advertising expenses are 2.1% and 1.02% of total assets, respectively, but they are relatively lower than those of NA firms. Unlike the manufacturing and service industries, wholesale and retail trade was significantly higher than the NA firms in terms of sales growth and total assets growth rate. In terms of market value, EPS and BPS were significantly higher, but the benefits, R&D expenditures, and advertising expenses were lower than those of NA firms. The information and communication industry showed lower level of performance than the NA firms in all indicators except cash liquidity, BPS, and EVA.

• KDI Journal of Economic Policy
• /
• v.12 no.3
• /
• pp.125-151
• /
• 1990

This paper reviews the economic liberalization experiences of the Southern Cone countries and draws some lessons from their experiences. The Southern Cone countries-Chile, Argentina and Uruguay-followed the different sequences in liberalization. Chile implemented the fiscal reform and the following comprehensive trade reform in the beginning of liberalization, but capital controls were maintained until 1979. Argentina and Uruguay placed more emphasis on the financial reform with the goods market reformed afterwards, but the fiscal sector was never reformed in Argentina. Since the serious inflation plagued the Southern Cone countries, they combined the economic liberalization scheme with the economic stabilization programmes which are based on the monetarist model. Although economic situations in the Southern Cone countries are quite different from those of Korea, we can learn many lessons from their experiences. First, the monetary and fiscal policies should consist of strict financial discipline to bring in the stable domestic inflation. Without the domestic stabilization, the financial liberalization could disturb the domestic economy as the capital inflows in particular generate a real exchange rate appreciation. Second, the monetary approach which is based on the full purchasing power parity and perfect capital mobility make stabilization as simple as a matter of the appropriate exchange rate policy and the proper rate of domestic credit creation. The unsuccessful experiences with monetarist stabilization in the Southern Cone countries suggest that the monetarist model cannot make real exchange rate and real interest rate stable with the trade and financial reform. Third, both the theory and practice have not yet provided a precise solution on the optimal sequencing and speed of the goods and financial market. Nonetheless, it seems desirable to keep the real exchange rate and the real interest rate stable by gradually opening up the current account and then the capital account.

• KDI Journal of Economic Policy
• /
• v.32 no.3
• /
• pp.1-32
• /
• 2010

The global financial crisis has exerted enormous impacts on the attainment of inflation target in Korea. The annual average CPI inflation was 3.3% during the targeting period of 2007-2009 and the target was $3.0{\pm}0.5%$. Thus Korea has succeeded in keeping annual average CPI inflation just below the upper limit of the 2007-2009 target under the global crisis. This paper intends to evaluate the performance of the inflation targeting system in Korea. First, it estimates the conventional call rate reaction equation under the global crisis and finds that the policy interest rates never reacted to expected inflation, output gap, and won/dollar exchange rate, as expected by theory. Second, it identifies the shock of global financial crisis into core and non-core, applying the structural VAR model. The core shock was defined to have no (medium- to) long-run impact on real output. The core shock was identified to have the character of the demand shock, since it has the positive impact on the inflation and output in the short run. The structural core inflation due to core shock was an attractor of headline inflation, not vice versa. Therefore, the structural core inflation that reflects the demand-side shock would be the better intermediate target for the final headline inflation target than the official core inflation that excludes the volatile inflation of agricultural and oil-related products. During the inflation targeting period of 2007-2009, the structural core inflation was more volatile than the official core inflation, because the global crisis has very large negative impacts on the domestic demand as well as the prices of agricultural and oil-related products. This paper shows that the negative core shock during the fourth quarter of 2008 was larger than that in the financial crisis in 1998. But the core shock turned into positive very quickly in 2009, as the Korean economy recovered very quickly from crisis. The volatile changes in structural core inflation suggests that the Bank of Korea barely managed to attain the 2007-2009 inflation target, owing to the very large negative impacts of the global financial crisis on the domestic demand. It also suggests that the rapid rise in core inflation with the rapid recovery of the Korean economy will lead to rapid rise in headline inflation.

• KDI Journal of Economic Policy
• /
• v.28 no.1
• /
• pp.117-144
• /
• 2006

This study is to analyze the existence of the real buffer effect that reflects the effect of beginning-of-period inventory stocks effect on the demand for fixed investment, and the financial buffer effect indicates the substitution effect between end-of-period inventory stock and the source of financing for fixed investment. I use panel data of 361 Korean listed non-financial firms during 1990-2003. After the crisis, it also observed whether the relationship between inventory stocks and fixed investment has altered or not. I review the theoretical connection between inventory stock and fixed investment through the paper by Bo(2004) and estimate the investment model by the method of GMM-SYS. The results show negative relation between end-of-period inventory stock and fixed investment in the whole period and each period classified, also it confirms that the relation between fixed investment and end-of-period investment is significantly negative. It can be interpreted through two aspects that firms not only use inventory stock as a buffer in response to unexpectedly high demand, but also utilize inventory stock as a source of financing for fixed investment. The results imply that firm's decision-making is much correlated with production-and-inventory stock adjustment, decision-making about fixed investment, and decision-making about financial affairs.

• Management & Information Systems Review
• /
• v.31 no.4
• /
• pp.33-56
• /
• 2012

The purposes of this paper are analysed the relationship between environmental regulation and financial performance in Korea. The financial performance of listed companies and Outside Auditing firms was evaluated by logistic regression. First, R&D investment is proportionally correlated with the ability to comply with environmental regulations. It can be explained increase of investment in R&D causes enhancement of compliance of environmental regulations with development of environmental technology. Second, statistical significance is not observed between financial aspects such as current ratio, debt-to-equity ratio, cash flow, and operating profit margin and the ability to comply with environmental regulations. It indicates high financial performance could not directly lead investment for the ability of that. Third, in terms of structural aspects, firm size and employees have a reliable correlation with compliance with environmental regulations due to high attention of larger firms for PR, and IR, while capital intensity and gravity, and exports do not. Finally, violation of environmental regulations is not affect by the controlling shareholder ownership.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.13 no.6
• /
• pp.39-48
• /
• 2018

Despite the fact that Daejeon has excellent technology infrastructures such as government-funded research institutes, Daedeok Innopolis, and KAIST, the infrastructure for initial investment and growth support for technological start-ups is not sufficient. In particular, the amount of venture capital supply in Daejeon is relatively low compared to other innovation infrastructures. The purpose of this study is to suggest the implications of the venture capital ecosystem in Daejeon area through the analysis of what evolution process has been undergoing and what improvements and complementary points are needed in the future. First, the role of public finance system should be strengthened in order to stimulate angel investment and private capital inflows to start-up companies. Second, in order to cultivate investment professionals in the region, it is necessary to grant local funds to local institutions, and to run investment expert training courses in universities. Third, cooperation between related agencies is needed to add accelerator functions to existing incubators and to foster new accelerators. Fourth, in order to expand the role of local governments, it is necessary to establish funds, to open innovation mindset of public officials, and to communicate effectively with the central government. Fifth, basic venture ecosystem infrastructures such as inflow of excellent manpower, prevention of technology deception, improvement of rechallenge environment should be expanded. Sixth, it is necessary to reorganize the step-by-step start-up financing policy of 'Establishment - Growth - Exit - Rechallenge'. This study is meaningful in that it has grasped the current status of venture start-up financial ecosystem in Daejeon, which is changing rapidly. In particular, it is different in that it identifies financial difficulties venture companies in Daejeon and finds ways to utilize existing financial ecosystem efficiently.

• Journal of International Area Studies (JIAS)
• /
• v.14 no.1
• /
• pp.129-153
• /
• 2010

The guiding research question of this paper is to discover 'why the UK could not develop a general structure in which transnational corporations were born during the end of the 19th ~ beginning of the 20th century like other countries'. In response to this question, although acknowledging its imperfections, the author would like to explore the causality in the context of 'Social Construction' which is reflected in the attributes of British society. As such, researchers are strongly recommended to take into account the actors' interests and the increased value effect of events which is driven by control power. This paper concludes that: firstly, not only was contempt for industrial capitalism prevalent in British society, the British government was unable to recognize the necessity of promoting policies for the development of transnational corporation. In addition, the increase in the clout of commercial-financial capitalists in the city of London along with the expansion of gentlemanly elites interfered with the transnationality of British companies. Secondly, the foundation of the political and economic structures in the UK experienced continuity and challenge simultaneously. Since the 1850's, the British social structure has been progressively characterized by the strengthening power of the commercial-financial elites in London, which resulted not in the transnationality of manufacturing but that of financial services. Finally, the configuration of the social network driven by the British elites consists of the actors' interests and control power in association with severance and connection. Unlike the complementarity of interests, in the initial stage, intended connection based on voluntary motivation between gentries and commercial-financial elites occurred in terms of control power. However, ultimately, the holding of power was transferred to the commercial-financial elites excluding the industrial capitalists and resulted in the reconfiguration of the social network.

• Journal of Korean Society of Rural Planning
• /
• v.22 no.2
• /
• pp.9-18
• /
• 2016

In this research, we reappraise saemaul project which is a leading role of rural development in a present perspectives and deduct social and political implications for rural development. For deducting problems and implications, related documents and previous researches are reviewed. Administration statistics are also gathered and analyzed for monitoring detailed projects propulsion progress and results. Samaul project is reappraised based on previous researches such as rural development, regional agricultural production system improvement, agricultural distribution system improvement, leader breeding, income improvement, and governance. Saemaul project has basically positive characteristics because of decreasing growth gap of urban and rural area by empowering cooperation of rural residents, instilling leadership, making village fund, constricting networks of government and urban area for administrative and financial assistant. In conclusion, there are implications that continues interests of most powerful sovereignty and comprehensive assistant of government are needed for overcome agricultural and rural crisis. Saemaulundong is a united and systematic approach in village level. In south korea where most of farms are small size, village or regional level assistants started in saemaulundong are still needed. In regional development, we can infer that will and ability development of participated residents are most basic and important factors for successful project propulsion in saemaul project.