In this paper, we construct a nominal rigidities DSGE (dynamic stochastic general equilibrium) model with financial frictions in which borrowings are limited by collateral constraints and analyze the importance of monetary and financial factors in Korean business cycles. After Bayesian estimation of the model, we find the explanatory power of the model with the collateral constraints is enhanced compared to a pure sticky price DSGE model without financial frictions and the importance of monetary and financial factors in Korean business cycles is well supported. With the introduction of the collateral constraints, the propagation of technology shocks is weakened whereas monetary shocks is more amplified due to the financial accelerator effects. Comparing housing collateral constraints and capital collateral constraints, we find that the capital collateral constraints are much more important as a financial accelerator mechanism than housing collateral constraints and the role of housing collateral constraints as a financial accelerator mechanism is limited.