Korea Institute of Finance

Abstract We examine the effective contribution of internal capital markets (ICMs) within business groups during financial crises, focusing on Korean chaebols. Using panel data on Korean firms, we first confirm that chaebol‐affiliated firms show a lower probability of bankruptcy than stand‐alone firms during crises. We also find that chaebol‐affiliated firms with low bankruptcy risk are more likely to be capital providers, while firms with high growth opportunities but higher bankruptcy risks tend to be receivers in ICMs. Moreover, this capital reallocation contributes to improving post‐crisis group‐level performance. Overall, our study highlights the importance and effectiveness of ICMs for Korean business groups during financial crises.

We study recovery from an adverse early-life environmental shock. First, we show that exposure to an adverse rainfall shock in the first year of life led to lower educational attainment for exposed Indonesians. Next, by use of geographic variation in the intensity of an Indonesian primary school construction program, we find that improved access to primary schools facilitated complete recovery from the educational deficit. The program had no effect on the education of individuals who did not experience the adverse rainfall shock. This was, in part, a result of deteriorating school quality and increased competition to get into middle schools.

This paper examines whether the bancassurance has attributed to enhancing the cost efficiency of insurance firms, which was the main purpose of the scheme in the first place. In particular, the goal of this paper is to revisit and reverify the results of existing studies that applied the DEA method to estimate the bancassurance effect, by employing additional analysis methods. Although there were some differences in the levels of efficiency each calculated by the three methods, the cost efficiency of life insurers has generally improved since the introduction of bancassurance according not only to the DEA model but most of the other models. Both comparative analysis and multiple regression analysis also support and confirm the results.

Using the Milligan and Wise ( 2015 ) and Cutler, Meara, and Richards-Shubik ( 2013 ) methodologies, we examine (i) how much would people today with a given mortality rate or life expectancy work if they were to work as much as those with the same mortality rate worked in the past, and (ii) how much could older adults extend their working lives if their health status improved. The results point to a sizable health capacity to work (HCW) among both older Korean men and women. Furthermore, the results imply that HCW is concentrated among more educated urban senior residents with access to the statutory pension system. We explain our results in the context of the Republic of Korea’s labor markets and old-age support systems. The results for the Republic of Korea imply that the previous results for other high-income economies, such as European countries and the United States, may not be applicable to high-income economies with underdeveloped pension systems.

Construction supervision is a key task that can confirm and inspect the project execution and support the creation of successful results. For the efficient performance of construction supervision, collecting various information necessary for the supervisor’s decision-making is a prerequisite, and the use of digital technology has recently been proposed as an alternative. Accordingly, the purpose of this study is to present a roadmap for the step-by-step use of digital technology to improve the efficiency of construction supervision. This study was limited to the supervision of construction projects, which have a high proportion of contract volumes in the Korean construction industry and can directly affect people’s lives. This study reclassified Korea’s construction supervision works, collected data on the urgency and effectiveness of detailed works from various stakeholders, and derived a final roadmap using importance–performance analysis. The results of this study are expected to serve as basic guidelines that can be used when reviewing digital technologies that can be applied step by step to improve the efficiency of construction supervision work.

The imbalance between the supply and demand of electricity is becoming expansive due to the increase in renewable energy penetration. Consequently, the time-varying electricity price is proposed as a tool to manage the mismatch. To cope with the electricity price difference across time and to extract the benefit to the limit, an energy storage system (ESS) can be a good tool to smooth out electricity usage. Nevertheless, ESS can be expensive due to the high installation cost and centrally managed system. In this paper, we propose a distributed ESS installed in each home appliance. Separately installed batteries can avoid sizeable initial investment costs. We calculated the benefit of the system that mainly stemmed from the electricity price difference and compared the benefits across various sizes of the battery system. In addition, the charging/discharging schedule depends on the power consumption profile and electricity price distribution. Decreasing battery prices and rising electricity price volatility can increase the system’s potential benefit.