The purposes of this paper are (1) to evaluate financial and corporate restructuring measures implemented since 1997 in Korea to overcome the economic crisis and retain sustainable growth, and (2) to analyze related issues, including the risk factors, future tasks, etc.
Whatever the ultimate causes were, there is no denying that the magnitude of the financial crisis in 1997 was amplified by capacity-driven policy, loose market discipline and lack of transparency. Also, before the crisis, the scope of regulations for financial institutions was not adequate and the degree of its implementation did not comply with international standards.
At the onset of the crisis, the government, as a liquidity provider, implemented various policy measures to stabilize the financial markets. In addition, by mobilizing huge amounts of public funds, non-viable financial institutions and corporates were shut down and viable ones were subject to pursue restructuring. Such measures have contributed to enhancing the competitiveness of the financial sector and transparency and accountability of the corporations.
Overall, the restructuring process of the past 5 years brought forth considerable accomplishments in laying the foundation for stable economic growth, improving financial infrastructure, easing economic vulnerability from external shocks and implementing a low-cost structure in the economy.
However, there are tasks that remain yet to be resolved. Among others, prudential regulation and supervision should be strengthened since the asset quality of financial institutions are still in question. The separation of banking from commerce is another issue to be settled, though it seems to be a very challenging task. To find the means to correct the imbalance existing in various regions, industries, and enterprises in Korea is very important to sustain social integrity and long-term competitiveness of our economy. Finally, we should make efforts to regain a sound government budget structure.
국민의 정부 5년(An appraisal of the past 5 years)
금융, 기업 구조개혁 종합평가(Financail and corporate restructuring in Korea)
|Series Title; No||정책조사보고서 / 2003-05|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|