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Chaebols, Financial Liberalization, and Economic Crisis: Transformation of Quasi-Internal Organization in Korea

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  • Lee, Chung H
  • Lee, Keun
  • Lee, Kangkook

Abstract

This paper argues that the course and outcome of the post-1993 financial reform in Korea were largely influenced by the interest politics of the most powerful interest group in Korea, chaebols, and thus an examination of their influence is essential to understanding the cause of Korea’s financial crisis of 1997-98. The paper concludes that a financial reform undertaken in a haphazard manner, manipulated by a few dominant players in the economy runs into the danger of producing an outcome worse than before.

Suggested Citation

  • Lee, Chung H & Lee, Keun & Lee, Kangkook, 2002. "Chaebols, Financial Liberalization, and Economic Crisis: Transformation of Quasi-Internal Organization in Korea," MPRA Paper 109950, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109950
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    References listed on IDEAS

    as
    1. Sang-Woo Nam, 1996. "The Principal Transactions Bank System in Korea and a Search for a New Bank-Business Relationship," NBER Chapters, in: Financial Deregulation and Integration in East Asia, pages 277-306, National Bureau of Economic Research, Inc.
    2. Leipziger, D.M. & Petri, P.A., 1993. "Korean Industrial Policy: Legacies of the Past and Directions for the Future," World Bank - Discussion Papers 197, World Bank.
    3. Dalla, I. & Khatkhate, D., 1995. "Regulated Deregulation of the Financial System in Korea," World Bank - Discussion Papers 292, World Bank.
    4. Takatoshi Ito & Anne O. Krueger, 1996. "Financial Deregulation and Integration in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_96-1.
    5. Amsden, Alice H. & Euh, Yoon-Dae, 1993. "South Korea's 1980s financial reforms: Good-bye financial repression (maybe), hello new institutional restraints," World Development, Elsevier, vol. 21(3), pages 379-390, March.
    6. Ito, Takatoshi & Krueger, Anne O. (ed.), 1996. "Financial Deregulation and Integration in East Asia," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226386713.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ahn, JaeBin & Choi, Moon Jung, 2020. "From firm-level imports to aggregate productivity: Evidence from Korean manufacturing firm data," Japan and the World Economy, Elsevier, vol. 56(C).
    2. Jeon, Bang Nam, 2012. "From the 1997-98 Asian financial crisis to the 2008-09 global economic crisis: lessons from Korea’s experience," MPRA Paper 36469, University Library of Munich, Germany.
    3. Chung Lee, 2005. "The Political Economy of Institutional Reform in Korea," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 10(3), pages 257-277.
    4. Jiyoung Kim, 2017. "Corporate financial structure of South Korea after Asian financial crisis: the chaebol experience," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-14, December.
    5. Driffield, Nigel & Pal, Sarmistha, 2006. "Do external funds yield lower returns?: Recent evidence from East Asian economies," Journal of Asian Economics, Elsevier, vol. 17(1), pages 171-188, February.
    6. Dong-Hwan Kim & Jesse Campbell, 2015. "Development, Diversification, and Legitimacy: Emergence of the Committee-Based Administrative Model in South Korea," Public Organization Review, Springer, vol. 15(4), pages 551-564, December.
    7. Tarun Khanna & Yishay Yafeh, 2007. "Business Groups in Emerging Markets: Paragons or Parasites?," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 331-372, June.
    8. Kim, Euysung, 2006. "The impact of family ownership and capital structures on productivity performance of Korean manufacturing firms: Corporate governance and the "chaebol problem"," Journal of the Japanese and International Economies, Elsevier, vol. 20(2), pages 209-233, June.
    9. Lee, Keonbeom & Peng, Mike W. & Lee, Keun, 2008. "From diversification premium to diversification discount during institutional transitions," Journal of World Business, Elsevier, vol. 43(1), pages 47-65, January.
    10. Kim, Joon-Kyung & Lee, Chung H., 2001. "Insolvency in the Corporate Sector and Financial Crisis in Korea," EIJS Working Paper Series 122, Stockholm School of Economics, The European Institute of Japanese Studies.
    11. Lee, Keun, 2020. "Varieties of Capitalism and re-thinking the East Asian model of economic growth after the Covid-19 pandemic: Rebalancing shareholder and stakeholder capitalism," MPRA Paper 110770, University Library of Munich, Germany.

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    More about this item

    Keywords

    financial liberalization; Asian crisis; Chaebols; political economy.;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • F3 - International Economics - - International Finance
    • F6 - International Economics - - Economic Impacts of Globalization
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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