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From Crisis to Recovery in Korea


Author Info

  • Kenneth Kang
  • Hong Liang
  • Henry Ma
  • Anthony J. Richards
  • Ajai Chopra
  • Meral Karasulu


This paper reviews and draws lessons from the stabilization and reform program that Korea implemented in response to the 1997-98 crisis. The economy recovered quickly from the deep recession in 1998 and its vulnerability to a balance of payments crisis has been reduced sharply. Significant progress has also been made in stabilizing the financial system and addressing corporate distress, and wide-ranging reforms have made Korea’s economy more open, competitive, and market driven. Notwithstanding these achievements, more needs to be done before the soundness of the corporate and financial sectors is firmly established.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/154.

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Length: 94
Date of creation: 01 Oct 2001
Date of revision:
Handle: RePEc:imf:imfwpa:01/154

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Postal: International Monetary Fund, Washington, DC USA
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Fax: (202) 623-4661
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Keywords: IMF; financial sector; financial institutions; capital markets; financial system; bond; moral hazard; bonds; corporate bonds; foreign capital; capital account liberalization; stock market; equity ratio; currency crisis; financial statements; bond market; international capital markets; corporate bond; corporate bond market; capital structure; capital inflows; bond funds; financial markets; investor confidence; securitization; liquidity support; cost of capital; international capital; credit rating; cash flow; international reserves; stock exchange; capital adequacy; capital outflows; deposit insurance; subsidiaries; liquidity crisis; debt service; hedging; guaranteed bonds; international standards; current account deficit; capital flows; credit rating agencies; capital market; equity prices; domestic bonds; securities companies; bond issues; domestic financial institutions; international banks; money markets; cash flows; financial liberalization; equity financing; interest coverage ratio; speculative attack; financial conglomerates; collateralized bond obligations; currency crises; financial structure; current account balance; working capital; equity markets; equity investments; crowding out; domestic credit; capital requirement; swift; access to capital markets; liquid asset; convertible bonds; financial contagion; management of capital inflows; crisis prevention; bond yields; capital base; financial services; equity capital; capital controls; access to funds; equity market; corporate bond markets; minimum capital requirement; liberalization of capital; financial reform; risk aversion; interest rate policy; derivative; financial assets; call options; bond obligations; special purpose companies; operating cash flow; financial economics; private investors; capital adequacy ratios; securitization of assets; excess supply; stock markets; capital ratio; stock price; speculative attacks; bond guarantees; capital asset ratio; deposit rates; domestic creditors; capital account policies; stock of government debt; excess demand; loss of confidence; corporate loans; financial innovation; hedge; capital asset; financial market; export revenues; stock price index; stock corporations; capital spending; financial stability; financial corporations; outstanding corporate bonds; corporate bond issues; international finance; bond issuances; bond markets; private capital; domestic bond; financial policies; net capital; bond rates; spcs; liquid bond market; portfolio investment; financial intermediaries; government securities; securities law; real effective exchange rate; financial vulnerabilities; stock prices; global bond; overvaluation;


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Cited by:
  1. Marcus Noland, 2007. "South Korea's Experience with International Capital Flows," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 481-528 National Bureau of Economic Research, Inc.
  2. Se-Jik Kim, 2003. "Macro Effects of Corporate Restructuring in Japan," IMF Working Papers 03/203, International Monetary Fund.
  3. Aykut Kibritcioglu, 2002. "Monitoring Banking Sector Fragility," Macroeconomics 0206004, EconWPA, revised 05 Apr 2004.
  4. Kibritcioglu, Aykut, 2002. "Excessive Risk-Taking, Banking Sector Fragility, and Banking Crises," Working Papers 02-0114, University of Illinois at Urbana-Champaign, College of Business.
  5. Ashoka Mody & Se-Jik Kim, 2004. "Managing Confidence in Emerging Market Bank Runs," IMF Working Papers 04/235, International Monetary Fund.
  6. Liu, Wan-Chun & Hsu, Chen-Min, 2006. "The role of financial development in economic growth: The experiences of Taiwan, Korea, and Japan," Journal of Asian Economics, Elsevier, vol. 17(4), pages 667-690, October.
  7. Simon Johnson & Andrei Shleifer, 2004. "Privatization and Corporate Governance," NBER Chapters, in: Governance, Regulation, and Privatization in the Asia-Pacific Region, NBER East Asia Seminar on Economics, Volume 12, pages 13-34 National Bureau of Economic Research, Inc.
  8. Se-Jik Kim, 2004. "Timing of International Bailouts," IMF Working Papers 04/9, International Monetary Fund.
  9. Udaibir S. Das & Richard Podpiera & Nigel Davies, 2003. "Insurance and Issues in Financial Soundness," IMF Working Papers 03/138, International Monetary Fund.
  10. Doowon Lee, 2006. "The Korean Economy in Transition: In Search for a New Model," Global Economic Review, Taylor & Francis Journals, vol. 35(2), pages 207-230.
  11. Joshua Aizenman & Kenneth M. Kletzer & Brian Pinto, 2002. "Sargent-Wallace Meets Krugman-Flood-Garber, or: Why Sovereign Debt Swaps Don't Avert Macroeconomic Crises," NBER Working Papers 9190, National Bureau of Economic Research, Inc.
  12. Hong, Kiseok & Lee, Jong-Wha & Lee, Young Soo, 2007. "Investment by Korean conglomerates before and after the crisis," Japan and the World Economy, Elsevier, vol. 19(3), pages 347-373, August.
  13. Pritha Mitra, 2006. "Post-Crisis Recovery," IMF Working Papers 06/219, International Monetary Fund.
  14. Bacha, Obiyathulla I., 2004. "Lessons from East Asia's Crisis and Recovery," MPRA Paper 12759, University Library of Munich, Germany.
  15. World Bank, 2003. "Turkey : Corporate Sector Impact Assessment Report," World Bank Other Operational Studies 14870, The World Bank.
  16. Saibal Ghosh, 2005. "Does leverage influence banks' non-performing loans? Evidence from India," Applied Economics Letters, Taylor & Francis Journals, vol. 12(15), pages 913-918.
  17. Otaviano Canuto & Swati R. Ghosh, 2013. "Dealing with the Challenges of Macro Financial Linkages in Emerging Markets," World Bank Publications, The World Bank, number 16202, October.


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