The effect of financial liberalization on firms’ investments in Korea
Many studies suggest that firms’ investments depend on the availability of internal funds. Firms face financial constraints because external funds are more costly than internal funds in an imperfect capital market. Financial liberalization plays the role of relaxing financial constraints on firms an...
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| Veröffentlicht in: | Journal of Asian economics 2005-04, Vol.16 (2), p.281-297 |
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| container_end_page | 297 |
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| container_title | Journal of Asian economics |
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| creator | Koo, Jaewoon Maeng, Kyunghee |
| description | Many studies suggest that firms’ investments depend on the availability of internal funds. Firms face financial constraints because external funds are more costly than internal funds in an imperfect capital market. Financial liberalization plays the role of relaxing financial constraints on firms and thereby reduces the sensitivity of investments to cash flow. This paper empirically examines whether financial liberalization affects firms’ investment behavior. Using panel data on Korean firms, we find that cash flow effects on investment decrease as financial markets are liberalized. In particular, small and non-chaebol firms are found to gain most from liberalization. This implies that large and chaebol firms are tending to lose their relative advantage in access to credit as liberalization proceeds. |
| doi_str_mv | 10.1016/j.asieco.2005.02.003 |
| format | Article |
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This implies that large and chaebol firms are tending to lose their relative advantage in access to credit as liberalization proceeds.</description><subject>Cash flow</subject><subject>Chaebol</subject><subject>Conglomerates</subject><subject>Financial constraints</subject><subject>Financial liberalization</subject><subject>Investment</subject><subject>Investment policy</subject><subject>Korea</subject><subject>Liberalization</subject><subject>Securities markets</subject><subject>Studies</subject><issn>1049-0078</issn><issn>1873-7927</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2005</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><sourceid>7TQ</sourceid><recordid>eNp9kE1OwzAQhSMEEqVwAxYR-wT_JXY2SKiC8lOJTVlbU2esOmqTYqeVYMU1uB4nwSUVSySP5i3eex59SXJJSU4JLa-bHIJD0-WMkCInLCeEHyUjqiTPZMXkcdREVBkhUp0mZyE0JErKylEynS8xRWvR9GlnU-taaI2DVbpyC_Swch_Qu65N47POr8P351fq2h2Gfo1tH6JOnzuPcJ6cWFgFvDjscfJ6fzefPGSzl-nj5HaWmYKpPuPMykoYqHGBggqgqGRRkKK0lC4WHKUiZWVtoSySihvg1sgSKlCSgaip4OPkaujd-O5tG8_QTbf1bfxSKyUKQVVVRpMYTMZ3IXi0euPdGvy7pkTvielGD8T0npgmTEdiMfY0xDxu0PxlEPFg3mkOMczhPc5vkoPbyzib_VZUs0rqZb-OZTdDGUYaO4deB-OwNVg7H2HrunP_X_MDe5WQDQ</recordid><startdate>20050401</startdate><enddate>20050401</enddate><creator>Koo, Jaewoon</creator><creator>Maeng, Kyunghee</creator><general>Elsevier Inc</general><general>Elsevier</general><general>Elsevier Science Ltd</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>DHY</scope><scope>DON</scope></search><sort><creationdate>20050401</creationdate><title>The effect of financial liberalization on firms’ investments in Korea</title><author>Koo, Jaewoon ; Maeng, Kyunghee</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c528t-32f794cadebe414a1e8755056f11bb3e78069ff58fe093ca3fc76a9a872a4d143</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2005</creationdate><topic>Cash flow</topic><topic>Chaebol</topic><topic>Conglomerates</topic><topic>Financial constraints</topic><topic>Financial liberalization</topic><topic>Investment</topic><topic>Investment policy</topic><topic>Korea</topic><topic>Liberalization</topic><topic>Securities markets</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Koo, Jaewoon</creatorcontrib><creatorcontrib>Maeng, Kyunghee</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>PAIS Index</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><jtitle>Journal of Asian economics</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Koo, Jaewoon</au><au>Maeng, Kyunghee</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The effect of financial liberalization on firms’ investments in Korea</atitle><jtitle>Journal of Asian economics</jtitle><date>2005-04-01</date><risdate>2005</risdate><volume>16</volume><issue>2</issue><spage>281</spage><epage>297</epage><pages>281-297</pages><issn>1049-0078</issn><eissn>1873-7927</eissn><abstract>Many studies suggest that firms’ investments depend on the availability of internal funds. 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| ispartof | Journal of Asian economics, 2005-04, Vol.16 (2), p.281-297 |
| issn | 1049-0078 1873-7927 |
| language | eng |
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| source | RePEc; Elsevier ScienceDirect Journals Complete; PAIS Index |
| subjects | Cash flow Chaebol Conglomerates Financial constraints Financial liberalization Investment Investment policy Korea Liberalization Securities markets Studies |
| title | The effect of financial liberalization on firms’ investments in Korea |
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