Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5091294 | Journal of Banking & Finance | 2007 | 17 Pages |
Abstract
In this paper, we present indirect evidence that the IMFs insistence on foreign control of two large nationwide Korean banks in exchange for short-term support during the 1997 financial crisis helped restrain soft related lending practices. News signaling the likely sale of a bank to a foreign financial institution yields an average daily decrease of about 2% in the stock price of related borrowers. News indicating difficulty in finding an interested foreign investor generates an increase in the stock price of related borrowers of about the same magnitude. These signals have larger impacts on less-profitable, less-liquid, and more bank-dependent firms.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
John P. Bonin, Masami Imai,