Korea's capital market promotion policies

This report studies a series of capital market promotion policies Korea pursued over a 30-year period during its development era (1960s-1980s). The purpose of this report is to extract lessons that can benefit policy makers in the developing world, where capital market promotion is an important policy goal. Given that the Korean government’s main interest during this era was to mobilize domestic capital for economic development and to lower its the firms’ debt-to-equity ratio, I have left out bond markets from my analyses; and when discussing the stock market, I have put greater weight on its primary market policies than the secondary market policies. It is a great challenge for developing countries to create a strong securities market. They lack many of the institutions necessary to control information asymmetry and self-dealing. That is to say, these countries are often without legal and market institutions which ensure that minority shareholders (i) receive reliable information about the value of a company’s business and (ii) allow them to have trust and confidence in a company’s management team and controlling shareholders. (The rest omitted)