Do Foreign Bank Operations Provide a Stabilizing Influence in Korea?

Yongil Jeon, Paul Anthony Natke

Research output: Contribution to journalArticlepeer-review


We examine data (1994-2001) to determine if foreign banks' behavior differed from domestic banks and if foreign banks helped to stabilize Korean markets. Foreign banks' financial ratios differed from Korean banks with two notable exceptions: provisions for loan losses and loan growth. Before the Asian financial crisis, all banks' loans generally did not respond to Korean market conditions. Post crisis, foreign banks reduced total lending. Foreign banks increased and Korean banks decreased won-denominated loans when Korean economic conditions improved after the crisis. Finally, foreign banks' lending reacted to changes in home-country GDP growth and real interest rates.

Original languageEnglish
Pages (from-to)82-109
JournalQuarterly Review of Economics and Finance
Issue number1
StatePublished - Feb 2006


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