2022 (19), №3

Empirical Analysis of the Financial Fragility of the Public Sector in South Korea

For citation: 

Bobryshova, A. S. & Rozmainsky, I. V. (2022). Empirical Analysis of the Financial Fragility of the Public Sector in South Korea. AlterEconomics, 19(3), 483–505. https://doi.org/10.31063/AlterEconomics/2022.19-3.5

Abstract:

The paper contains empirical analysis of the financial fragility of the public sector in South Korea. The study’s conceptual framework relies on the financial instability hypothesis developed by American econo­mist Hyman Minsky. The study adopts three different approaches to calculate the financial fragility indices. Then their values are compared with the dynamics of the main macroeconomic indicators of South Korea. The results of the empirical analysis show that the degree of financial fragility of the public sector gradually increased, and the turning point was the period of the Asian financial crisis of 1997–1998. Thus, it can be supposed that the liberal reforms and restructuring of financial and capital markets in the Republic of Korea were the reason behind the increase in financial fragility and the transition of the South Korean government from a stable financing regime (hedge financing regime) to more unstable regimes (speculative and Ponzi). In the late 2000s and 2010s, the unstable publiс sector financing regime in Korea is in good agreement with the relatively stable private sector financing regime discussed in the paper by Rozmainsky & Selitsky (2021).

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Anzhelika S. Bobryshova — Bachelor, Department of Asian Studies, St. Petersburg School of Social Sciences and Area Studies, National Research University “Higher School of Economics” (123 A, Kanala Griboedova Embankment, St. Petersburg, 190068, Russian Federation; e-mail: asbobryshova@edu.hse.ru).

Ivan V. Rozmainsky — Cand. Sci. (Econ.), Associate Professor, Department of Economics, St. Petersburg School of Economics and Management, National Research University “Higher School of Economics”; https://orcid.org/0000-0003-1321-2718 (3 A, Kantemirovskaya St., St. Petersburg, 194100, Russian Federation, e-mail: irozmain@yandex.ru).

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