The recovery of Korean economy can be severely hindered by the weakness of its financial system. Reform and restructuring are crucial. In this respect this paper discusses various issues in resolving problem financial institutions and offers some valuable implications to policy-makers.
It starts with introducing the governing principles in restructuring troubled institutions, such as least cost, loss-sharing, and depositor protection, among others. The paper then designs some resolution schemes in the context of how to close the institution, how to fill the hole, how to handle the problem assets, and how to finance the resolution. The range of approaches the authorities can adopt is also provided by looking at the examples of those countries that are hit by the financial crisis and forced to take some decisive action with regard to failing institutions. This paper ends with making several suggestions that can enhance the efficiency and transparency in dealing with troubled financial institutions in the Korean context.
|Series Title; No||금융조사보고서 / 99-13|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|