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).
on exchanges all over the world, the largest is the NYSE, New York Stock Exchange.
Types
Common Stock
Preferred Stock
Incorporate enterprise can issue stock.
If incorporate enterprise which not registered in market, issue stock more than 2 billion won or issue stock for more than 50 investors, the enterprise has to submit financial statement to FSS(Finance Supervisor Service)
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
least direct intervention in the operation of credit markets, tit is only experimental
Method 2: Direct Injections Of Capital
The problem of legitimacy and acceptance is especially salient. It may also be difficult to make injections of the necessary magnitude. The injections may make the banks richer, and therefore less likely to become insolvent, but they will not necessarily lend more money
insolvent was not seen directly, he warned the possibility that the housing industry would be stagnant because of sub-prime bubble.
For reference, in theory, in case FRF , if interest on money falls down 1%, the house price would increase 10%. So a 2% drop of the interest on a loan result in 20% increase of the house price.
Failure to control bubble by a tight-money policy
While liquidity in