Consumer Credit Market in Korea since the Economic Crisis

Chang-Gyun Park

in Financial Sector Development in the Pacific Rim

Published by University of Chicago Press

Published in print April 2009 | ISBN: 9780226386843
Published online February 2013 | e-ISBN: 9780226386867 | DOI:
Consumer Credit Market in Korea since the Economic Crisis

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This chapter documents the rapid growth of household credit in Korea since the foreign exchange crisis in 1997. It also examines the development of the credit card crisis in 2003 and evaluates the adequacy of ensuing policy responses. It is argued that the Korean credit card crisis is a classic example of regulatory failure. The deregulation was inappropriately done without the requisite infrastructure (in this case, a central institution to administer credit information). The government intervention was timed poorly, and an abrupt regulatory change in 2002 resulted in a crash of credit card lending. With more timely and proper policies, many of these difficulties could have been at least alleviated if not averted altogether.

Keywords: household credit; Korea; credit card crisis; financial market; financial regulation; deregulation

Chapter.  14833 words.  Illustrated.

Subjects: Business and Management

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