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- Title
The Impacts and Implications of Interest Rate Hike on Korean Shipping Companies.
- Authors
Park, Sunghwa; Kim, Hanna; Choi, Sooho; Kim, Taeil
- Abstract
Park, S.; Kim, H.; Choi, S., and Kim, T., 2023. The impacts and implications of interest rate hike on Korean shipping companies. In: Lee, J.L.; Lee, H.; Min, B.I.; Chang, J.-I.; Cho, G.T.; Yoon, J.-S., and Lee, J. (eds.), Multidisciplinary Approaches to Coastal and Marine Management. Journal of Coastal Research, Special Issue No. 116, pp. 418-422. Charlotte (North Carolina), ISSN 0749-0208. The COVID-19 pandemic has resulted in record-breaking container freight rates and profits for the top 10 global container carriers. This shipping industry upswing has been fuelled by the surge in money supply prompted by the aggressive monetary policies of major economies, which is driving global inflation. The U.S Federal Reserve has raised it's the federal funds rate in response to soaring prices, and the Bank of Korea has followed suit, increasing its key policy rate to 3.50 % on 10 occasions between August 2021 and January 2023. The study initially analyzed the developments in domestic and international shipping markets as well as the responsiveness of shipping firms to changes in the global economy. It then assessed the financial impact of probable interest rate hikes on Korean shipping companies utilizing scenario analysis. The findings reveal that a predicted 3 % increase to the key policy rate in 2022 would result in a KRW 1.65 trillion (116 %) rise in interest expenditure across the 127 shipping companies. Ultimately, the Korean shipping sector is expected to ready itself for the impending recession in the post-COVID-19 epoch through the provision of precautionary support measures and policy implications in response to the predicament induced by interest rate hikes.
- Subjects
CHARLOTTE (N.C.); SOUTH Korea; INTEREST rates; BOARD of Governors of the Federal Reserve System (U.S.); SHIPPING companies; FEDERAL funds market (U.S.); MARITIME shipping; FREIGHT &; freightage rates; MONEY supply
- Publication
Journal of Coastal Research, 2023, Vol 116, p418
- ISSN
0749-0208
- Publication type
Article
- DOI
10.2112/JCR-SI116-085.1