The Korean Financial Crisis of 1997: A Strategy of Financial Sector Reform
International Monetary Fund, Mar 1, 1999 - Business & Economics - 66 pages
After years of strong performance, Korea’s economy entered a crisis in 1997, owing largely to structural problems in its financial and corporate sectors. These problems emerged in the second half of that year, when the capital inflows that had helped finance Korea’s growth were reversed, as foreign investors—reeling from losses in other Southeast Asian economies—decided to reduce their exposure to Korea. This paper focuses on the sources of the crisis that originated in the financial sector, the measures taken to deal with it, and the evolution of key banking and financial variables in its aftermath.
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20 percent assets balance sheet Bank of Korea Bank Supervision bank’s banking sector banking system basis points billion capital adequacy ratios chaebols commercial banks commercial paper consolidated corporate bonds corporate restructuring corporate sector crises crisis currency debt December depositors deregulation deterioration development banks economy end of period equity exchange rate export exposure Financial ﬁnancial sector Financial Supervisory Commission ﬁnancial system ﬁnancing ﬁrms ﬁrst ﬂuctuating foreign borrowing foreign exchange foreign exchange markets funds govemment increased industries Inﬂation interest rates International Financial Statistics January KAMCO Korean banks loan classiﬁcation loan losses macroeconomic maturity merchant banks merger MOFE Monetary NBFIs nonbank ﬁnancial institutions nonperforming loans NPLs percent of GDP percent of total percentage policy loans portfolios problems proﬁts provisioning rules prudential regulations purchase recapitalization reﬂecting reform reserves risk short term signiﬁcantly SMEs specialized and development strategy strengthening supervisory trillion trust accounts U.S. dollar