XML

Seoul Journal of Economics - Vol. 17 , No. 3

[ Article ]
Seoul Journal of Economics - Vol. 17, No. 3, pp.403-437
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2004
Received 04 Nov 2004 Revised 10 Dec 2004

Financial Reform in Korea: Unfinished Agenda
Jae-Jung Kwon
Senior Research Fellow at Korea Institute of Finance, KBF Building 8th Floor, 4-1, Myung-dong, Choong-gu, Seoul, Korea, Tel: +82-2-3771-5210 (jjkwon@kif.re.kr)

JEL Classification: G18, G21, O16


Abstract

Since the financial crisis in 1997, Korea has achieved many positive changes, ranging from stronger balance sheets of financial institutions to significant efficiency gains at the operational level. Despite the marked changes, however, much work still remains ahead for Korea’s financial system. This paper reflects upon what has transpired since the containment of the crisis and further discusses emerging issues. Prudence in lending policy exercised by financial institutions should be further improved. Although they are not likely to develop into a systemic risk, corrective actions must be taken on structural problems such as excessive debts carried by households and small and medium-sized enterprises. Flow of funds should be normalized by revitalizing long-term capital market.


Keywords: Financial reform, Bank, Policy

References
1. Allen, Franklin, and Oura, Hiroko. The Future of the Korean Financial System. Mimeograph, University of Pennsylvania, 2004.
2. Choe, Heung-Sik, Kwon, Jae-Jung, and Kim, Woo-Jin. Rebuilding Korea’s Financial System. Korea Institute of Finance, 1999.
3. Davis, E. Philip. Debt Financial Fragility and Systemic Risk. New York: Oxford University Press, 1995.
4. Hanna, Donald, Oh, Suktae, and Cliff, Tan. Korean Financial Restructuring: Where to from Here. Economic and Market Analysis, Salomon Smith Barney, 2000.
5. Kim, Joon-Kyung. “Assessment of Progress in Corporate Restructuring in Korea Since the 1997-98 Crisis.” In Stijn Claessens and Dongsoo Kang (eds.), Empirical Evaluation of Corporate Restructuring. Korea Development Institute, 2002.
6. Kim, Woo-Jin. Software Reform of Financial System: Performance- Based Compensation and Corporate Governance. Korea Institute of Finance, 2001.
7. Kwon, Jae-Jung. Bank Failure Management: Korea's Experience. Korea Institute of Finance, 2001.
8. Kwon, Jae-Jung. “Changes and Prospects of the Korean Banking Industry.” Woori Bank, 2004.
9. Lee, Dong-Gul, and Kwon, Jae-Jung. Corporate Financial Health and Corporate Customer Strategy of Banks. Korea Institute of Finance, 2003.
10. Lee, Taekyu. Bank Size, Asset Diversification and Risk, 03-07. Korea Economic Research Institute, 2003.
11. Lown, Cara, Carol Osler, Philip, Strahan, and Amir, Sufi. “The Changing Landscape of the Financial Services Industry: What Lies Ahead?” FRBNY Economic Policy Review 6 (No. 4 2000): 39-55.
12. Song, Tae Jung. Changes in the Determinants of Corporate Investment, and the Outlook. LG Economic Research Institute, 2002.
13. Stiroh, Kevin. Diversification in Banking Is Non-Interest Income the Answer? Federal Reserve Bank of New York Working Paper, 2002.