Loans to financially distressed firms contributed to Korea's 1997 crisis. Possible explanations for these loans include bank's better inside information on borrowing firms, crony lending, and financial institutions' (FI) moral hazards (FIs' poor governance). We examined 6474 non-financial firms'...

Since the Asian economic crisis in 1997, some have argued that the poor corporate governance system was a contributing cause of the crisis. They claim that the weakness of minority shareholders' rights protection and the lack of market discipline for poor performing firms in the region made it...