ABSTRACT
In the wake of the Asian Financial Crisis, South Korea sought the largest-ever emergency financial assistance package, amounting to US$;57 billion, from the IMF in early December 1997 to avoid a moratorium on its foreign debt. Bad debts in both the financial and corporate sectors were at the core of Korea’s financial crisis, which was triggered by contagion and currency speculation in July 1997. This chapter describes what Korea has accomplished in terms of restructuring its financial and corporate sectors over the past three and a half years, and addresses the unfinished restructuring agenda and a newly emerging development paradigm with some policy implications. It describes a “compressed growth” process and rising non-performing loans, viewed from both the financial sector and corporate sector. The chapter discusses various phases of restructuring in the financial sector that have been accomplished up to date, and discusses the restructuring of the corporate sector.
