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Financial reform in Korea

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Frame of Image orporate governance in Korea. Foreign investors have also become increasingly skeptical of the government’s willingness and ability to implement economic reforms and serious structural adjustment. In addition, the ominous effects of the currency crises in the Southeast Asian countries had spilled over to Korea. Financial crises in Thailand and Indonesia, of unanticipated intensity and power of contagion adversely affected Korea. This contagion coincided with a period of structural adjustments, as well as a cyclical downturn in the Korean economy. Less than a year after its accession to the OECD in 1996, Korea experienced a severe financial crisis. With its useable foreign exchange reserves nearly exhausted in December 1997, the Korean government turned to the International Monetary Fund for a US$58 billion economic rescue package. Since then, economic activity and aggregate demand have shrunk sharply in the face of eroded confidence. Financial markets have remained vulnerable. A fragile financial sector, weak supervision and prudential regulation, and a corporate sector burdened with high levels of short-term debt were at the heart of the crisis in Korea. Korea’s financial crisis is deeply rooted in the nation’s inefficient and distorted financial system, brought about by the extensive credit restrictions used as a primary tool of economic development in the past. A prolonged period of interest rate control and
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selective credit allocations have resulted in inefficient distr


Full Text
Title Financial reform in Korea
Similar Titles
Material Type Reports
Author(English)

Kang, Moon-Soo

Publisher

[Seoul]:Korea Development Institute

Date 2000-03
Pages 27
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Economy < Economic Conditions
Holding Korea Development Institute

User Note

Papers and discussions from the Joint KDI/CHIER Conference