Chapter

<i>Chaebol</i> Capitalism and the Currency-Financial Crisis in Korea

Edited by Anne O. Krueger and Jungho Yoo

in Preventing Currency Crises in Emerging Markets

Published by University of Chicago Press

Published in print November 2002 | ISBN: 9780226184944
Published online February 2013 | e-ISBN: 9780226185057 | DOI: http://dx.doi.org/10.7208/chicago/9780226185057.003.0014
Chaebol Capitalism and the Currency-Financial Crisis in Korea

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This chapter examines the causes behind the Korean currency-financial crisis of 1997–98. It also explores the evolution of chaebol financial and economic performance during the last decade and a half. Rapid expansion of domestic credit was a feature of the precrisis period in Mexico, Indonesia, Thailand, Malaysia, and Korea. The chaebol were successful exporters and, for the first decade or more of Korean growth, were regarded almost as the heroes of Korean development. Their vulnerability was especially dangerous, given their importance to the Korean economy. By 1997, they were highly vulnerable to negative shocks. The chaebol debts to the banks are the chief culprit, and because they were major exporters, the change in the exchange rate per se probably did not harm their ability to service their debts. However, the increased interest rate clearly did.

Keywords: Korean currency-financial crisis; Korea; chaebol; domestic credit; Korean economy; exporters; banks

Chapter.  22196 words.  Illustrated.

Subjects: International Economics

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