Korean financial crisis during 1997-1998 Causes and challenges

Abstract

This paper analyzes the underlying causes of the Korean financial crisis during 1997-98 period. How the economic growth strategies adopted by Korean government have influenced the current-state financial turbulence is analyzed in a historical manner. Root causes of Chaebol problems are also investigated in relations to government policies and weakened financial sector. Further, the effectiveness of external remedy programs such as IMF bail-out package are critically assessed. Finally, the paper concludes with the observation that, despite the current crisis, the Korean economy still possesses strong fundamentals, therefore, the economic recovery is soon to be obtained with continuous reform efforts. © 1999 Elsevier Science Inc.