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Bank nationalization, restructuring and reprivatization : The case of Korea since the Asian financial crisis

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  • Bank nationalization, restructuring and reprivatization
  • Cho, Hyekyung; Kalinowski, Thomas
  • The institute of Korea Studies


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Title Bank nationalization, restructuring and reprivatization
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Sub Title

The case of Korea since the Asian financial crisis

Material Type Articles
Author(English)

Cho, Hyekyung; Kalinowski, Thomas

Publisher

[Seongnam, South Korea]:The institute of Korea Studies

Date 2010-03
Journal Title; Vol./Issue Korea Observer:vol. 41(no. 1)
Pages 30
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Economy < Economic Administration
Holding SSRN

Abstract

This article is a case study of the political economy of bank restructuring, privatization and market liberalization in the South Korean banking sector since the 1997/1998 financial crisis. We show that the most crucial factor in that post-crisis bank restructuring was the quick and massive state intervention that involved nationalization or closure of failed banks and a "clean-up" of banks’ bad assets through an injection of a huge amount of public funds. This strategy was feasible because the government successfully managed to suppress the vested interests of domestic market participants, including shareholders, employees, and borrowers. We argue that the process of bank restructuring and (re-) privatization in Korea cannot be explained just by market dynamics. On the contrary, we stress that a political economic approach offers a more consistent explanation of the government’s rush to sell nationalized banks to foreign investors and international banks. (The rest omitted)

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TPRC 41: The 41st Research Conference on Communication, Information and Internet Policy