Policy Analyses
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Policy Analyses
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Toward Intraregional Exchange Rate Stability of Emerging East Asian Economies
Toward Intraregional Exchange Rate Stability of Emerging East Asian EconomiesJonghwa Cho and Woo Jin KimSince the outbreak of the East Asian Crisis in 1997, many of the emerging East Asian market economies have changed their excha..
Jonghwa Cho et al. Date 2001.12.20
Financial cooperation, Monetary policyDownloadContentSummaryToward Intraregional Exchange Rate Stability of Emerging East Asian Economies
Jonghwa Cho and Woo Jin Kim
Since the outbreak of the East Asian Crisis in 1997, many of the emerging East Asian market economies have changed their exchange rate systems in order to overcome depreciation pressures on their currencies. Korea, Thailand, Indonesia and the Philippines adopted a floating exchange rate system, while Malaysia turned to a fixed exchange rate system. Therefore the exchange rate system of most of the East Asian countries have been changed to one of the so-called two corner solutions. (The rest is omitted.) -
Singapore's Strategy towards Knowledge-Based Economy and Its Implications
Singapore's Strategy towards Knowledge-Based Economy and Its ImplicationsJae-Wan CheongRecently, the world economy has rapidly changed into globalization of competition, development of ICT, acceleration of science and technology i..
Jae-Wan Cheong Date 2001.12.20
DownloadContentSummarySingapore's Strategy towards Knowledge-Based Economy and Its ImplicationsJae-Wan Cheong
Recently, the world economy has rapidly changed into globalization of competition, development of ICT, acceleration of science and technology improvement, high-class orientation and diversification of economic demand. As these economic conditions cause synergy among them, economic paradigm is rapidly converting into Knowledge-Based Economy (KBE); corporate or national competitiveness depends on technology and knowledge. The appearance of KBE greatly influences fundamental value and culture of a society as well as economic structure and corporate business pattern. According to these, major advanced nations including OECD nations of U.S., U.K., Netherlands, Canada have entered KBE or forwarded the movement since the middle of 1990s. Specially, Singapore, one of our rival countries, has also moved into KBE to survive in this new economic environment directly after the East Asian Financial Crisis.On the basis of this background, this study is to perform analysis and assessment on the strategy of Singapore that is moving towards KBE earlier than us, to compare them with those of Korea, and to draw the implications and tasks to build KBE in Korea. But, the limitations of this study are that it just focuses on data and references announced by the Singapore government, deals with limited interview with experts, and narrowly interprets the strategy toward KBE of the subject for analysis and assessment. (The rest is omitted.) -
The Liberalization of Banking Sector and the Effect of Foreign entry in Korea
Since the 1990s, the international financial environment has fast changed in terms of globalization, diversification, deregulation and innovation. The development of information and telecommunications technology has led banking in..
Sang In Hwang et al. Date 2001.12.20
Economic opening, Financial liberalizationDownloadContentSummarySince the 1990s, the international financial environment has fast changed in terms of globalization, diversification, deregulation and innovation. The development of information and telecommunications technology has led banking institutions to shift from the traditional lending and borrowing activities to multi-financial projects and development of new financial products. Financial engineering has generated various derivatives and international financial transactions have, thereby, been diversified, with the loosening various restrictions on the financial industry.
The banking system plays a key role in the functioning of a market economy. How well developed an economys banking system is seems to have an important bearing on resource allocation and growth. The Asian crisis in the late 1990s was a financial crisis as well as a currency crisis. Financial development is thus a very important and urgent task for Korea and other crisis-stricken Asian countries. Banking services, while an interesting subject in its own right, deserves close attention from this point of view.
This paper discusses the liberalization of banking service and its impact on the Korean economy. Its focus is on banking services, as banks occupy the central position in the financial sector. Our goal is to provide the useful implication on three main questions in Korea. First, when foreign bank participates in domestic market, is there gain from better monitoring? And second, we are to ask whether lending behaviors of foreign banks in Korea were different from Korean banks over business cycles. Also, third, is the presence of foreign bank increase profit of domestic banks?
From the regression analysis, first, we tentatively argue that foreign banks in Korea were not providing the monitoring role to Korean banks. Second, it is interesting to note that for foreign banks, foreign currency loans did not show any cyclical properties while for Korean banks, it was domestic currency loans. It suggests that foreign banks provided a stabilizing role as far as foreign currency loan is concerned. In addition, we also tested how the foreign banks' penetration into the domestic banking industry affect domestic banks' profitability. As a measure of foreign penetration we used the asset share and deposit share as well as number share. In all cases, the foreign penetration reduced the domestic bank's profitability. We think that foreign bank entry made the domestic banking industry more competitive and less profitable.
However, it would be too hasty to conclude that the liberalization does not provide benefits. Unless they become fair and transparent so that information gathering, credit assessment, risk management, and so on may be the essential part of financial intermediation, it seems that the liberalization cannot deliver the potential benefits. -
A Guide to Investment Treaties
This book seeks to enhance the general public's perception of investment treaties and promote awareness in the general public of the benefits of investment treaties. Furthermore, by explaining issues in disputes related to investm..
Kwan-Ho Kim et al. Date 2001.12.18
Multilateral negotiationsDownloadContentSummaryThis book seeks to enhance the general public's perception of investment treaties and promote awareness in the general public of the benefits of investment treaties. Furthermore, by explaining issues in disputes related to investment treaties, this book attempts to enhance public interest and understanding on investment treaty. -
A Guide to Foreign Direct Investment
This book seeks to enhance the general public's perception of foreign direct investment and promote awareness in the general public of the benefits of foreign direct investment. Furthermore, by explaining issues in dispute such as..
Co-authors Date 2001.12.18
DownloadContentSummaryThis book seeks to enhance the general public's perception of foreign direct investment and promote awareness in the general public of the benefits of foreign direct investment. Furthermore, by explaining issues in dispute such as foreign dominance of domestic firms and foreign acquisition at a giveaway price easily to understand and giving Britain's successful case, this book attempts to enhance public interest and understanding on foreign direct investment. -
China's Integration with the World Economy: Repercussions of China's Accession to the WTO
This book is the outcome of intense academic and policy debates at a round table conference held to assess the impact of China's accession to the WTO on the Chinese and world economies. The conference, held in Beijing on August 25..
Kyung Tae Lee et al. Date 2001.12.15
Economic openingDownloadContentSummaryThis book is the outcome of intense academic and policy debates at a round table conference held to assess the impact of China's accession to the WTO on the Chinese and world economies. The conference, held in Beijing on August 25 and 26, 2001, was organized by the Korea Institute for International Economic Policy (KIEP), a policy-oriented thinktank in Seoul, Korea. Some 30 distinguished scholars and policy makers from China, Korea, Japan and Hong Kong participated in the conference, exchanging views on issues related to China's entry into the WTO. -
Aggregate Shock, Capital Market Opening, and Optimal Bailout
This paper explores the joint effect of aggregate productivity shocks and capital market liberalization on the optimal bailout (or liquidation) policy of banks towards defaulted borrowers. It suggests that in bad times both good ..
Se-Jik Kim Date 2001.12.10
Financial liberalization, Capital marketDownloadContentSummaryThis paper explores the joint effect of aggregate productivity shocks and capital market liberalization on the optimal bailout (or liquidation) policy of banks towards defaulted borrowers. It suggests that in bad times both good and bad firms default on their obligations, it is harder for the bank to distinguish between the two and therefore it is less costly to bail out defaulted firms. Therefore, the optimal liquidation rate in a closed economy may be substantially lower in recessions than in booms. In an economy with open capital markets, however, the corporate rate of return has to be raised at least up to the world rate of interest by improving the composition of the corporate sector through higher liquidation in order to prevent an outflow of capital and the subsequent financial crisis. As a result, the optimal liquidation rate (bailout rate) during recessions may be much higher (lower) in an economy with liberalized capital markets than in a closed economy. The model in this paper explains why liquidation rates of defaulted firms have risen significantly and structural reform to facilitate more liquidation has been pursued after the financial crisis in those East Asian countries with more liberalized capital markets. -
Reform of the Financial Institutions in China:Issues and Policies
Executive SummaryThis paper analyzes the financial reform in China, given the characteristics of the transition economy. The Chinese financial system has certain characteristics including an overly rapid expansion of credit, a ban..
Eui-Hyun Choi Date 2001.11.30
Economic reformDownloadContentSummaryExecutive SummaryThis paper analyzes the financial reform in China, given the characteristics of the transition economy. The Chinese financial system has certain characteristics including an overly rapid expansion of credit, a bank-dominated financial system, weak central bank regulation and supervision of commercial banks, and a massive buildup of non-performing loans (NPLs). The Chinese financial sector has accumulated a huge number of NPLs. This is because i) banks are in charge of state projects in place of the fiscal system, and ii) financial institutions give loans to money-losing enterprises. China needs a coordinated reform of its financial, enterprise, and fiscal systems. (The rest is omitted.) -
Economic Effects of China's WTO Accession and Policy Implications on Korea
This study aims to estimate the economic impact of China's accession to the WTO and to find policy implications for the facilitation of trade and investment between Korea and China. (The rest is omitted.)
Inkyo Cheong Date 2001.11.30
Economic outlookDownloadContentSummaryThis study aims to estimate the economic impact of China's accession to the WTO and to find policy implications for the facilitation of trade and investment between Korea and China. (The rest is omitted.) -
How to Cope with the Doha Agenda
This book seeks to enhance the general public's perception of the Doha Agenda and to promote awareness in the general public of the benefits of foreign direct investment through giving concrete examples. Furthermore, by explaining..
Co-authors Date 2001.11.20
Economic openingDownloadContentSummaryThis book seeks to enhance the general public's perception of the Doha Agenda and to promote awareness in the general public of the benefits of foreign direct investment through giving concrete examples. Furthermore, by explaining issues in disputes related to the Doha Agenda, this book attempts to enhance public interest and understanding on foreign direct investment.