External Finance and Productivity Growth in Korea: Firm Level Evidence Before and After the Financial Crisis
외부금융과 기업생산성 간 관계에 대한 실증분석
This paper empirically investigates the finance-growth linkage in Korea by utilizing firm-level data of manufacturing industries before and after the 1997 financial crisis. We find that, first, an increase in external finance is associated with a faster subsequent capital accumulation of firms. However, this capital accumulation channel became relatively attenuated after the crisis. Second, the total factor productivity growth effect of external finance has been considerably weak both before and after the crisis. Third, the information production and industry restructuring effects of external finance have also remained weak after the crisis. The limited role of external finance in post-crisis Korea partially reflects sluggish corporate investment and weakening dependence of good credit firms on external finance. The evidence suggests that, in order to effectively sustain economic growth, further reform efforts may be required to strengthen resource allocation and corporate restructuring roles of financial markets and institutions.
Click the button and follow the links to connect to the full text. (KDI CL members only)
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.