The Restructuring in the Post-Crisis Korean Economy

The current paper evaluates the restructuring measures implemented in the post-crisis Korean economy. Its policies taken after the economic crisis were quite successful in terms of economic recovery. The financial and corporate sector reforms undertaken by the Korean government contributed to strengthening the banking and corporate sectors, attracting FDI inflows. However, most indicators show worsening of income inequalities and workers. situation regarding job security. The strengths as well as the weaknesses of the development strategy of Korea and its reform measures undertaken since the occurrence of the economic crisis need to be differentiated.

The Performance of Domestic and Foreign Banks: The Case of Korea and the Asian Financial Crisis

This paper considers the performance of banks, domestic and foreign, in Korea prior to, during, and immediately after the Asian financial crisis, examining how the profitability of those banks differed and identifying factors that explain why those differences existed. The performance of Korean banks deteriorated dramatically in 1998 with most banks recovering somewhat in 1999. Foreign banks did not experience the same negative effect on their returns on assets and equity as a rule. Several standard findings emerge. For example, equity to assets correlates positively with domestic, but not foreign, bank performance, as measured by the returns on assets and equity, even when the government recapitalized institutions that were performing quite badly. Also, foreign-currency deposits significantly and negatively correlate with domestic Korean bank performance, although only in the post-crisis period for regional banks. In sum, the domestic Korean banks suffered more severely from the Asian financial crisis than foreign banks.