Financial Reforms and Financial Crisis: The Korean Case

Junggun Oh and Donghyun Park
Additional contact information
Junggun Oh: The Bank of Korea, Seoul 100-794, Korea

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 1999, vol. 02, issue 03, 265-284

Abstract: We assess the role of financial reforms and liberalization in Korea's financial crisis, which erupted in late 1997. We first examine financial reforms carried out since the early 1980s and their effects on corporate financing as well as on the current account. We then analyze policy issues associated with the current financial crisis. Our main conclusion is that the crisis is due in no small measure to the unbalanced nature of Korea's financial reforms — extensive external liberalization combined with inadequate internal liberalization. The massive inflow of foreign capital associated with external liberalization exacerbated the over-investment problem that already existed in the 1970s. The inefficiencies of Korea's manufacturing corporations and financial institutions mutually reinforced each other, producing a vicious cycle of ever lower productivity of capital. The key to Korea's recovery thus lies in successful restructuring of both its financial and corporate sectors.

JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091599000151
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:rpbfmp:v:02:y:1999:i:03:n:s0219091599000151

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091599000151

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().