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Crisis and corporate insolvency

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Frame of Image ngsoo Kang, Senior Fellow, Korea Development Institute (KDI) Yong Kyun Kim, Research Assistant, Korea Develpmet Institute (KDI)
Advisory Research Management
Oh-Kyu Kwon, Former Deputy Prime Minister of Korea Korea Development Institute (KDI) School of Public Policy and 	 Management
Supported by
Ministry of Strategy and Finance (MOSF), Republic of Korea
Government Publications Registration Number 11-1051000-000169-01 ISBN 978-89-93695-28-1 94320 ISBN 978-89-93695-27-4 [SET 40] Copyright © 2012 by Ministry of Strategy and Finance, Republic of Korea
Government Publications Registration Number 11-1051000-000169-01
Knowledge Sharing Program
2011 Modularization of Korea’s Development Experience
Crisis and Corporate Insolvency
Preface
The study of Korea’s economic and social transformation offers a unique opportunity to better understand the factors that drive development. Within one generation, Korea had transformed itself from a poor agrarian society to a modern industrial nation, a feat never seen before. What makes Korea’s experience so unique is that its rapid economic development was relatively broad-based, meaning that the fruits of Korea’s rapid growth were shared by many. The challenge of course is unlocking the secrets behind Korea’s rapid and broad-based development, which can offer invaluable insights and lessons and knowledge that can be shared with the rest of the international community. Recognizing this, the Korean Ministry of Strategy and Finance (MOSF) and the Kore


Full Text
Title Crisis and corporate insolvency
Similar Titles
Project Category Development Cases
Material Type Reports
Author(English)

Cho, Won-Dong; Kang, Dongsoo; Kim, Yong Kyun

Publisher

Seoul:KDI School of Public Policy and Management

Date 2012
Project Development Cases
Series Title; No Knowledge Sharing Program: KSP Modularization
ISBN 978-89-93695-28-1; 978-89-93695-27-4 [SET 40]
Pages 130
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < Entrepreneurship
Holding KDI School of Public Policy and Management
Supervisor KDI School of Public Policy and Management
Organizer Ministry of Strategy and Finance; Korea Development Institute
Sponsor Ministry of Strategy and Finance
Project Term 2011-01-01 ~ 2011-12-31

Abstract

The 1997 financial crisis is a landmark for change in the methods of corporate restructuring in Korea. During the high-powered growth era prior to the event, the government had been in the center of both resource allocations and distress resolutions. With an advantage in information over the private sector, government authorities had engaged in the operational details of corporate businesses for the purpose of expediting economic development in a short period of time. This strategy had been very successful, yielding over 7 percent real annual growth for nearly 40 years with few serious catastrophes.
The 1997 crisis ended this prosperous era, exposing various systemic problems within the economy. With the high ratios of debt to equity, Korean corporations were expected to yield high profitability on their equity. However, the corporate sector had become less and less profitable since the early 1990s. The return on capital, on average, had been lower than its opportunity cost for almost ten years before the crisis. (The rest omitted)

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