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How Finance Is Shaping the Economies of China, Japan, and Korea$
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Hugh Patrick and Yung Chul Park

Print publication date: 2013

Print ISBN-13: 9780231165266

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231165266.001.0001

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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 22 October 2019

Banking, Capital Flows, and Financial Cycles

Banking, Capital Flows, and Financial Cycles

Common Threads in the 2007–2009 Crises

Chapter:
(p.302) Chapter Five Banking, Capital Flows, and Financial Cycles
Source:
How Finance Is Shaping the Economies of China, Japan, and Korea
Author(s):

Young-Hwa Seok

Hyun Song Shin

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231165266.003.0005

This chapter considers the phenomenon of financial globalization. This type of globalization is organized within the role of financial intermediaries, especially banks, in the proliferation of financial cycles. Firstly, this chapter reviews the merits of financial globalization with particular attention to the effects of unhindered capital flows. Secondly, it analyzes these effects against the financial system as a whole of the balance sheet management done by the financial intermediaries, after which the next section applies these insights to four certain episodes; namely, the 2008 liquidity crisis in Korea, Japans experience in the 1980s, US financial crisis of 2007–2009, and the European crisis that began in 2010. The chapter concludes with an emphasis on the importance of macro-prudential policies.

Keywords:   financial globalization, financial intermediaries, banks, financial cycles, capital flows, 2008 liquidity crisis, 1980s, US financial crisis, European financial crisis, macro-prudential policies

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