@article{ART003258011},
author={Lee Dong Jin},
title={Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks},
journal={Analyses & Alternatives},
issn={2508-822X},
year={2025},
volume={9},
number={3},
pages={75-108},
doi={10.22931/aanda.2025.9.3.004}
TY - JOUR
AU - Lee Dong Jin
TI - Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks
JO - Analyses & Alternatives
PY - 2025
VL - 9
IS - 3
PB - Korea Consensus Institute
SP - 75
EP - 108
SN - 2508-822X
AB - This paper estimates the insolvency risk of non-bank saving institution in Korea financial institutions focusing on mutual banks, and evaluates factors that can preemptively explain this risk. To achieve this, we define insolvency as a situation where the net capital ratio of mutual finance falls to a level of prompt corrective action and estimate the risk of insolvency and explanatory factors for the following year using a binary dependent variable model. Additionally, for comparative analysis, a dynamic panel model with the net capital ratio of the following year as the dependent variable was estimated. Using panel data from 2,173 mutual financial institutions from 2008 to 2021, we evaluated the explanatory power of around 50 indicators. The estimation results indicated that, for agricultural cooperatives engaged in both financial and economic activities, economic business-related indicators had significant explanatory power for the insolvency risk of the following year. Secondly, the explanatory power for default risk in terms of asset quality and profitability differed between NH and SH, suggesting that the distinct operational characteristics of these two types of mutual financial institutions could influence their default risks. Thirdly, the factors explaining default risk and those explaining the net capital ratio itself were somewhat different, implying that the management approach for the net capital ratio in general business conditions differs from that in situations where default risk is elevated. Fourthly, capital adequacy indicators demonstrated high explanatory power, whereas liquidity indicators were estimated not to be statistically significant.
KW - Non-bank saving institution;CAEL;Complementary log-log model;credit unions;default risk;dynamic panel model;Nong-hyup union banks;Shin-hyup union banks.
DO - 10.22931/aanda.2025.9.3.004
ER -
Lee Dong Jin. (2025). Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks. Analyses & Alternatives, 9(3), 75-108.
Lee Dong Jin. 2025, "Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks", Analyses & Alternatives, vol.9, no.3 pp.75-108. Available from: doi:10.22931/aanda.2025.9.3.004
Lee Dong Jin "Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks" Analyses & Alternatives 9.3 pp.75-108 (2025) : 75.
Lee Dong Jin. Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks. 2025; 9(3), 75-108. Available from: doi:10.22931/aanda.2025.9.3.004
Lee Dong Jin. "Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks" Analyses & Alternatives 9, no.3 (2025) : 75-108.doi: 10.22931/aanda.2025.9.3.004
Lee Dong Jin. Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks. Analyses & Alternatives, 9(3), 75-108. doi: 10.22931/aanda.2025.9.3.004
Lee Dong Jin. Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks. Analyses & Alternatives. 2025; 9(3) 75-108. doi: 10.22931/aanda.2025.9.3.004
Lee Dong Jin. Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks. 2025; 9(3), 75-108. Available from: doi:10.22931/aanda.2025.9.3.004
Lee Dong Jin. "Factors of Insolvency Risks in Non-Bank Saving Institution: The Case of Mutual Banks" Analyses & Alternatives 9, no.3 (2025) : 75-108.doi: 10.22931/aanda.2025.9.3.004
