ABSTRACT
While it is not always the first best solution, an effective monitoring mechanism is important to ensure economic efficiency and to resolve potential conflicts between parties/entities, particularly in the absence of established (shared understanding based) long-term interactions. Banks’ corporation monitoring in Korea, ex ante as well as ex post, is crucial to understand efficient capital allocation, business investment, and the agency problems because the economy has been dominated by debt-financing firms and/or business groups. 1
