Recovery from a financial crisis: the case of South Korea

Sherry L. Kiser and Jahyeong Koo

Economic and Financial Policy Review, 2001, issue Q IV, 24-36

Abstract: Among the countries that were impacted by the 1997 Asian crisis, South Korea (Korea hereafter) has demonstrated the fastest recovery by blocking its downward spiral. Jahyeong Koo and Sherry Kiser examine the recovery process of financial crises, particularly in Korea, in light of the weak-fundamentals and financial-panic views. Since neither of these views adequately explains Koreas recovery, the authors look at other phenomena for an explanation. Alternative financial arrangements and labor market adjustments are specifically examined. The authors acknowledge that Koreas recovery was only possible after it gained control of its exchange-rate crisis. Since the recovery process affirms neither the weak-fundamentals view nor the financial-panic view, Koo and Kiser conclude that containing the downward spiral was a combination of factors working together and that much of Koreas recovery can be attributed to the creation of alternative funding sources and labor adjustments.

Keywords: Banks; and; banking; -; Korea (search for similar items in EconPapers)
Date: 2001
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