ABSTRACT
This chapter describes the characteristics of the state-led housing finance system during Korea's early industrialization period and explores the transition to a market-based system since the 1980s. It discusses the failure of the state-led housing finance system; the superiority of a market-based finance system; and political and economic processes associated with the global capitalist system. The malfunctioning and instability of housing financial institutions have been well chronicled in the downfall of the savings and loan industry in the United States, the problems of many specialized housing finance companies in Japan, and the bankruptcy of Credit Foncier de France in France. The shift toward a market-based system in housing finance is parallel to the shift of global capitalism toward a liberal market system since the 1980s. In sum, the root cause of the transition to a market-based system of housing finance is the overall transformation of the Korean financial system and of the Korean system of economic governance.
