A new default and credit risk model for Korea
A new paper from the Bank of Korea develops the east Asian country's first-ever model to estimate the probability of default and evaluate credit risk.
A repeat of the 1997-8 financial crisis would cause the soundness of small and medium enterprises' and households' to deteriorate, the research finds. "However, it also predicts that domestic banks can tolerate such a situation, provided the shock episode only lasts one year," the paper adds.
The authors point out that the lack of high quality
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