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Economic Papers Vol.4 No.1(1)

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연구조정실 (Monetary Studies Team(tel : 82-2-759-5407, fax:82-2-759-5410) ) 2001.06.19 7625
Contents for Economic Papers Vol.4 No.1 * Economic Papers was first published in January 1998 by the Bank of Korea, and it will appear twice a year. * Opinions expressed herein are those of the authors and not necessarily those of the Bank of Korea. The authors will be glad to receive comments on their articles. Economic Studies Office, The Bank of Korea 110 3-Ka Namdaemun-Ro Chung-Ku Seoul 100-794, Korea Phone : +82-2-759-5406 Fax : +82-2-759-5410 E-mail : 1. Financial Development and Economic Growth: The Role of Information Accumulation(Byungyoon Lee) 2. On the Estimation of the Productivity of Korean Commercial Banks (Choong Lyul Lee and Young Soo Lee) 3. Economic Shock and Structural Change: Is There a New Economy in Korea, too?(Jong-Kun Lee) 4. Intra-Industry Trade of Korea: Its Trends and Determinants (Chiho Kim and Yo Chul Choi) 5. Exchange Rate Movement Before and After Free Floating: Efficiency and Technical Trading Profitability (Sangdai Ryoo) 6. Exchange Rates, Exchange Rate Volatility and Investment in Korea: An Empirical Investigation (Changkye Choi) 7. The Optimal Currency Basket and the Currency Bloc in Asia* (Tae-Joon Kim and Jai-Won Ryou) Financial Development and Economic Growth: The Role of Information Accumulation Author: Byungyoon Lee Full Text: EP_4_1_1.pdf Summary: This paper analyzes the relationship between financial development and economic growth focusing on the role of information accumulation. I construct a theoretical model in which information accumulation of banks through learning-by-lend ing determines both the level of financial development and the economic growth rate. The main results of the present paper can be summarized as follows. First, a country efficiently accumulating information in the financial sector achieves rapid growth and a high degree of development of its financial sector. Second, due to the self-reinforcing process in information accumulation, multiple equilibria occur. One of them is a low equilibrium, the so-called "development trap", characterized by low growth and underdevelopment of the financial sector, while the other is a high equilibrium which shows high growth and a high level of development of the financial sector. The results of this paper imply that an economy having a low level of initial development of the financial sector is likely to have a low equilibrium. I suggest international borrowings as a policy with which a government can save an economy from a low equilibrium trap through Pareto improvement. On the Estimation of the Productivity of Korean Commercial Banks Author: Choong Lyul Lee and Young Soo Lee Full Text: EP_4_1_2.pdf Summary: We define a total factor productivity of Korean commercial bank and we decompose it into several factors to find productivity determinants of Korean commercial banks. In addition, we classify Korean commercial banks into many groups and we test whether total factor productivities are the same among these groups. According to our estimation result, TFP growth rates of Korean commercial banks suddenly fall from 1995. In addition, there is a significant difference in TFP growth rates of 1997 between Model Ⅰand Mode l Ⅱ indicating that not only the total bank loans but also the non-performing loans increase very much in 1997. When decomposing TFP growth rates, an economies of scale effect and a branch effect help to increase the TFP growth rates during 1990s while a senior worker effect, an information technology effect, a general technology effect and a branch effect help to reduce. When classifying Korean banks into several groups and decomposing their TFPs into several factors, we find that some effects are significantly dif