Shin, Hyun Song and Kwanho Shin (2011): "Procyclicality and Monetary Aggregates", NBER Working Paper No. 16836, National Bureau of Economic Research.
Financial intermediaries borrow in order to lend. When credit is increasing rapidly, the traditional deposit funding (core liabilities) is supplemented with other funding (non-core liabilities). We explore the hypothesis that monetary aggregates reflect the size of non-core and core liabilities and hence convey information on the stage of the financial cycle. In emerging economies with open capital markets, non-core liabilities of the banking system take the form of short-term foreign exchange liabilities, increasing the vulnerability to the outbreak of “twin crises” where a liquidity crisis is compounded by a currency crisis.While we neither want to disrespect the authors nor South Korea as an economy, we found that the first, general parts of the paper were most notable and generously skipped some 'empirical' parts, considering them back-up for the ideas introduced before. Like that, the paper's a pleasantly short yet interesting read.