Scandinavian Working Papers in Economics

EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

No 122: Insolvency in the Corporate Sector and Financial Crisis in Korea

Joon-Kyung Kim () and Chung H. Lee
Additional contact information
Joon-Kyung Kim: Korea Development Institute and University of Hawaii at Manoa
Chung H. Lee: European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract: The paper shows that between the late 1980s and 1997, the year when Korea was engulfed in a financial crisis, its corporate-sector profitability was on a decreasing trend, albeit short-term ups and downs. The evidence presented in the paper suggests that Korea’s corporate and financial sectors had been highly vulnerable to a crisis for some years before 1997 and the actual timing of the crisis was triggered by the financial crisis in Thailand in July 1997 and its contagion effect.

Keywords: Asian crisis; Korean economy; corporate sector insolvency.

JEL-codes: G28; L52; O53

16 pages, April 2001

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