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Korean Journal of Financial Studies 2010;39(4):611-641.
Published online December 31, 2010.
Internal Capital Markets and Chaebol Investments
Chang Soo Kim
재벌기업집단의 내부자본시장과 투자
김창수
Abstract
This paper investigates the workings of internal capital markets within Korean chaebols and their effects on firm investments over the periods before and after the IMF bailout. The chaebols were criticized for inefficient investments supported by the capital raised through internal capital markets before the 1997 IMF bailout. This paper investigates whether the excessive investments by chaebols have been reduced and the internal capital markets have become inactive after the IMF bailout. Contrary to the existing evidence, our results show that the internal capital markets are still active and chaebol firms invest more than control sample firms. The difference seems to be caused by the improved matching between chaebol and control sample firms through the matching estimator technique. There is no evidence that the higher chaebol investments were possible by the cheaper capital raised in the external capital market utilizing the chaebol status. However, the investment efficiency of chaebol firms is higher than that of control sample firms.
Key Words: 내부자본시장,대응추정치,외환위기,재벌,투자,Chaebol,IMF Bailout,Internal Capital Market,Investment,Matching Estimator


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