II. What Are Credit Derivatives?
Derivatives are defined as the exchange or contract which has economic values deriving from the reference assets or index. According to their types, there are overall forward, future, option, and swap. Derivatives are the financial derivatives, which are enabled to trade in the market while consisting of separating the credit risk only to the holder of basic p
What is Bad Bank?
Special Purpose Company
Purchasing insolvent obligations and assets
separate management and specialized treatment
Bad Bank when IMF occurred
Loan about 150 - trillion won from IMF
Constitute a ‘fund for dealing of insolvent obligation’ through issuing bond, Purchase insolvent obligations of financial institution
Issue products based on underwritten insolven
ⅱ) Insolvency of enterprise and bank
- Insolvency of enterprise
In 1997, average debt ratio of Korea enterprises was 333%. It was relatively higher than that of USA(159%) and Japan(206%)
It caused insolvency of the enterprises, which lead to major companies went bankrupt.
- Insolvency of bank
at that time, Many Chiefs of financial organizations was sent from above(낙하산 인사).
insolvent enterprises and banks according to the demand of IMF.
- As a result, we lose the financial independence and a large portion of profit went to foreign capital and foreign investor.
- It means that no matter how the people may work and earn money, economic outcomes was not the part of the people.
- Eventually, most of Koreans has suffered unstable life except some people.
The M