The Korean Financial Crisis of 1997: Onset, Turnaround, and Thereafter

The Korean Financial Crisis of 1997: Onset, Turnaround, and Thereafter

by World Bank


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Product Details

ISBN-13: 9780821382394
Publisher: Bernan Distribution
Publication date: 01/28/2011
Pages: 472
Product dimensions: 6.00(w) x 8.90(h) x 1.00(d)

Table of Contents

Preface xiii

About the Author xvii

Abbreviations xix

1 The Unfolding of the Korean Financial Crisis 1

1996: A Year of Uncertainty 1

The Hanbo Bankruptcy and the Degradation in External Creditworthiness, January-March 1997 5

A Monetary Lull in Financial Markets, April-June 1997 8

A Looming Crisis in Financial Markets, July-September 1997 12

Onset of the Financial Crisis and the Request for an IMF Rescue, October-November 1997 21

Notes 34

2 Origin of the Crisis 35

Divergent Views of the Crisis 35

The Macroeconomy and the Financial Crisis 37

Korea's Structural Weaknesses and Vulnerabilities 43

The Risks of Capital Liberalization 53

The International Financial Architecture and the Financial Crisis 60

Lax Crisis Management in Korea 69

Notes 71

3 Overview of Korea's Postcrisis Responses 73

Crisis Recovery and Policy Challenges 73

The Implementation of Postcrisis Measures 82

Notes 85

4 Initial Responses to the Crisis, December 1997 87

Actions by the IMF, December 3, 1997 87

Korea: Memorandum on the Economic Program 90

Actions Prior to the IMF Standby Arrangement 95

Banking Reforms 96

Averting National Insolvency 98

Notes 110

5 Securing Foreign Currency Liquidity and Laying the Groundwork for Reform and Restructuring, December 1997-April 1998 111

Securing Foreign Currency Liquidity 111

Capital Market Liberalization and the Expansion of Foreign Investment 116

Laying the Groundwork for Structural Reform 120

The Intensifying Credit Crunch and Mounting Unemployment 133

Notes 150

6 Restructuring Led by Business Closures and the Push for Lower Interest Rates, May-June 1998 151

The Recognition of Economic Reality 151

The Focus of Corporate and Financial Restructuring on the Closure of Failing Businesses 153

Lowering Interest Rates and Easing the Credit Crunch 164

The Contracting Real Economy and Deepening Labor Unrest 175

Notes 178

7 Completion of First-Phase Restructuring and Policies Aimed at Boosting Potential Growth, July-September 1998 179

Economic Outlook and Policy Challenges, Second Half of 1998 179

The Completion of the First Round of Restructuring 186

Expanded Unemployment Measures and Labor Union Resistance to Restructuring 208

The Russian Moratorium and the Fate of the Won 218

Policies for Robust Growth 226

Notes 235

8 Getting the Economy Back on Track and Quickening the Pace of Restructuring, October-December 1998 237

Policy Challenges and the Shifting Economic Landscape 237

Instability in International Financial Markets and the Government Response 239

Quickening the Pace of Restructuring 248

Policies Aimed at Economic Revival 274

9 Restoring Financial Stability and Realizing Positive Economic Growth, January-June 1999 283

The Economic Policy Agenda for 1999 283

Forging Ahead with Restructuring 286

The Investment Grade Rating and the Supply of foreign Exchange to Markets 305

Restoring Calm to Financial Markets and Resuming Positive Growth 314

10 The Settlement of the Daewoo Shock and the Expanded Economic Recovery, July-December 1999 327

Policy Challenges and Responses during the Second Half of 1999 327

Strategies for the Transition to a Knowledge-Based Economy 330

The Collapse of the Daewoo Group and Restoring Calm to Financial Markets 336

Pressing Ahead with Structural Reform 344

Economic Hardship among Low- and Middle-Income Households and the Government Response 360

Accelerating Economic Recovery and the Transition to Net Creditor Status 364

11 Korea's Economic Renewal: Challenges and Solutions for the Transition to the Next Level 369

Questions about the Korean Economy 369

Diagnosis of the Korean Economy 370

The Challenges Ahead in Korea's Economic Revival 389

The Reform of Korea's Economic System 397

Note 413

References and Other Sources 415

Index 421

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