Paradigm shift in Korean economic policy in the wake of the 1997 financial crisis

Government intervention or market liberalization: the Korean financial crisis as a case of market failure

“…Similarly, in their comprehensive analysis, Corsetti et al (1998) and Kwon (2001), claim that the roots of the Korean crisis lay in the way the government provided implicit guarantees to the banking system. This meant that banks were often engaged in lending practices that tended to favour politically connected borrowers -in particular, the chaebols or large family-controlled conglomerates.…”

The Korean financial crisis: implications for international business in Korea

“…In the early 1990s, Korea's financial market was liberalised under pressure from advanced countries, and in the absence of proper regulations, banks borrowed excessively from shortterm international capital markets-a direct cause of the financial crisis (Kwon 1998). 9 For a detailed discussion of the relationship between state intervention and the 1997 financial crisis, see Kwon (1999). 10 The government has set up an employment stability fund to compensate dismissed workers.…”

Recent Changes in Korea's Business Environment: Views of Foreign Business People in Korea

“…Government intervention and repression of the labour market over time caused labour market inflexibility, which led to greater union militancy and higher wages after the political democratization in the late 1980s. These characteristics of government policy and the resulting business environment were directly related to the causes of the 1997 financial crisis (Cha, 2001;Jwa & Yi, 2001;Kwon, 2001a).…”

“…Since the financial crisis, the Korean government has undertaken a paradigm shift in its economic policy and pursued relentless institutional and structural reforms in compliance with the International Monetary Fund (IMF) rescue package (Bishop 2001, Kwon 2001a. Korean economic policy has changed from promoting a government-led economy to a market economy.…”