The Role of State Intervention in the Financial Sector : Crisis Prevention, Containment, and Resolution
AbstractThis paper discusses the role of state intervention for prevention, containment, and resolution of financial crises based mainly on the Korean experience during the 1997 Asian financial crisis. Crises in emerging market and developing economies tend to be more complicated than those faced by advanced economies because they are twin crises : financial and currency crises. Such crises require the development of a comprehensive strategy covering the stabilization of the domestic financial market and the foreign exchange market, closely coordinated responses by different government bodies, an extraordinary effort for financial restructuring, and the introduction of a new regulatory framework. This effort should be based on an effective crisis management team of experts given a clear mandate with well defined power; strong political support; effective communication with the market players, both domestic and foreign; and sufficient mobilization of public funds. In this regard, this paper emphasizes the importance of building a reliable information base, prompt actions, orchestrating political consensus, and a balanced approach to restructuring and regulation among different types of financial institutions. The paper also highlights the need for a new international financial architecture matching the rapid integration into the global market of the financial markets of emerging and developing economies while their currency remains non-convertible.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 23013.
Date of creation: Jan 2010
Date of revision:
Contact details of provider:
Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
Web page: http://www.eaber.org
More information through EDIRC
financial crisis; Korea; state intervention; crisis management; financial regulation;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- G01 - Financial Economics - - General - - - Financial Crises
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Katrin Assenmacher-Wesche & Stefan Gerlach, 2008.
"Ensuring financial stability: financial structure and the impact of monetary policy on asset prices,"
IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich
361, Institute for Empirical Research in Economics - University of Zurich.
- Assenmacher-Wesche, Katrin & Gerlach, Stefan, 2008. "Ensuring Financial Stability: Financial Structure and the Impact of Monetary Policy on Asset Prices," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6773, C.E.P.R. Discussion Papers.
- Assenmacher-Wesche, Katrin & Gerlach, Stefan, 2008. "Ensuring financial stability: Financial structure and the impact of monetary policy on asset prices," IMFS Working Paper Series, Institute for Monetary and Financial Stability (IMFS), Goethe University Frankfurt 16, Institute for Monetary and Financial Stability (IMFS), Goethe University Frankfurt.
- Asl? Demirgüç-Kunt & Edward J. Kane & Luc Laeven (ed.), 2008. "Deposit Insurance around the World: Issues of Design and Implementation," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262042541, December.
- Stephen G. Cecchetti & Hans Genberg & Sushil Wadhwani, 2002. "Asset Prices in a Flexible Inflation Targeting Framework," NBER Working Papers, National Bureau of Economic Research, Inc 8970, National Bureau of Economic Research, Inc.
- Caprio, Gerard & Honohan, Patrick, 2001. "Finance for Growth: Policy Choices in a Volatile World," MPRA Paper, University Library of Munich, Germany 9929, University Library of Munich, Germany.
- Ben Bernanke & Mark Gertler, 1999.
"Monetary policy and asset price volatility,"
Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City,
Federal Reserve Bank of Kansas City, pages 77-128.
- Ben Bernanke & Mark Gertler, 1999. "Monetary policy and asset price volatility," Economic Review, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, issue Q IV, pages 17-51.
- Ben Bernanke & Mark Gertler, 2000. "Monetary Policy and Asset Price Volatility," NBER Working Papers, National Bureau of Economic Research, Inc 7559, National Bureau of Economic Research, Inc.
- Diaz-Alejandro, Carlos, 1985. "Good-bye financial repression, hello financial crash," Journal of Development Economics, Elsevier, Elsevier, vol. 19(1-2), pages 1-24.
- Fry, Maxwell J, 1989. "Financial Development: Theories and Recent Experience," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 5(4), pages 13-28, Winter.
- Demirguc-Kunt, Asl' & Kane, Edward J., 2001.
"Depositinsurance around the globe : where does it work?,"
Policy Research Working Paper Series, The World Bank
2679, The World Bank.
- Asli Demirguc-Kunt & Edward J. Kane, 2002. "Deposit Insurance Around the Globe: Where Does It Work?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(2), pages 175-195, Spring.
- Edward J. Kane & Asli Demirguc-Kunt, 2001. "Deposit Insurance Around the Globe: Where Does it Work?," NBER Working Papers, National Bureau of Economic Research, Inc 8493, National Bureau of Economic Research, Inc.
- Cho, Yoon Je, 1988. "The effect of financial liberalization on the efficiency of credit allocation : Some evidence from Korea," Journal of Development Economics, Elsevier, Elsevier, vol. 29(1), pages 101-110, July.
- Peter J. Morgan & Mario Lamberte, 2012.
"Strengthening Financial Infrastructure,"
Finance Working Papers, East Asian Bureau of Economic Research
23191, East Asian Bureau of Economic Research.
- Morgan, Peter J. & Lamberte , Mario, 2012. "Strengthening Financial Infrastructure," ADBI Working Papers, Asian Development Bank Institute 345, Asian Development Bank Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.