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A critical overview of financial sector reform in Korea : Experience and remaining challenges

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  • A critical overview of financial sector reform in Korea
  • Huh, Chan
  • The Association of Korean Economic Studies


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Title A critical overview of financial sector reform in Korea
Similar Titles
Sub Title

Experience and remaining challenges

Material Type Articles
Author(English)

Huh, Chan

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2000
Journal Title; Vol./Issue The Journal of the Korean Economy:vol. 1(no. 1)
Pages 40
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Holding AKES

Abstract

The long-standing practice of government intervention in credit allocation, as well as in key managerial decisions, has weakened banks in Korea. The attendant implicit assumption of credit risks provided an underlying cause for high leveraging on the part of the corporate sector, the absence of credit analysis and lending concentration on the part of banks, and superficial supervision on the part of regulators. Scant attention to risk management, on the part of all parties concerned, contributed to the onset of the financial distress in 1997. The government implemented a set of corrective measures and prevented a complete paralysis of the financial sector. However, the crucial issue remains whether the financial intermediaries' contributions to the national economy will be in the form of offering autonomous monitoring services or warehousing scarce financial resources to finance government-picked national champion industries.