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SIM, Seung-Gyu
Department Aoyama Gakuin University Department of International Economics, School of International Politics, Economics and Communication Position Professor |
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| Language | English |
| Publication Date | 2020/12 |
| Type | Academic Journal |
| Peer Review | Peer reviewed |
| Title | The cyclical behavior of household and corporate credit in emerging economies |
| Contribution Type | Collaboration |
| Journal | Emerging Markets Review |
| Journal Type | Another Country |
| Publisher | Elsevier |
| Volume, Issue, Page | 45 |
| Author and coauthor | Seung-Gyu Sim and Saiah Lee |
| Details | Standard consumption-investment theory predicts counter-cyclical (pro-cyclical) behavior of household (corporate) credit whereby households' consumption smoothing and firms' investment motives are aligned. Counter to the theoretical symbiosis consistent with U.S. data, we demonstrate not only in South Korea, but also in 19 emerging economies that the pro-cyclical behavior of household credit dominates that of corporate credit. Our analysis further reveals that dominant, pro-cyclical household credit accompanied by (collateral) assets and fueled by external debt generates counter-cyclical behavior in interest rates, amplifies credit market fluctuation, and hinders the growth of small- and medium-size businesses in the South Korean economy. |