Presentator : Syngjoo Choi Economics of Department GSAS Hong Kong - - PowerPoint PPT Presentation

Presentator : Syngjoo Choi Economics of Department GSAS

Hong Kong stock market panic Nov. Korean Won collapses. Haitai (24th) , New-Core (28th) bankrupt. Dec. Korea gets IMF bail-out Kim Dae-Jung as a new president Jan. 1998 Korea restructures debts Peregrines goes bust Rupiah falls to lowest level ever April A slow recovery of stock market and exchanges market Japan begins liberalizing financial markets Aug. Russia declares moratorium

* Excessive short-term foreign exchange liabilities

• 5000

5000 10000 90 91 92 93 94 95 96 97 98 99 2000 Source : BOK, partially cited from Rhee and Lee (98) million U

• A bad equilibrium

· Exchange Rate Devaluation · Moral Hazard

• Overinvestment
• Too big to fail

• 10
• 5

83-89 90 91 92 93 94 95 96 97 98 1Q 98 2Q 98 3Q 98 4Q 99 2000 Source : The Bank of Korea % Growth

• 10
• 5

5 83-89 90 91 92 93 94 95 96 97 98 1Q 98 2Q 98 3Q 98 4Q 99 2000 Source : The Bank of Korea % Unemployment Rate CA(Current A.)/GDP

50 100 90 91 92 93 94 95 96 97 Source : Ministry of Finance in Korea Short/Reserves

Number of financial institutions

1990 91 92 93 94 95 96 97 Banks 23 25 26 26 26 26 26 26 Merchant banking companies 6 6 6 6 15 15 30 30 Insurance companies 45 49 49 49 49 49 49 50 Securities companies 25 31 32 32 32 33 34 36

• IMF Programs
• Structural Policy Responses

workout procedures, Legislation allowing M&As, Phasing out of cross-guarantees among companies belonging to same chaebol.

• Strengthening performance: Improved governance

(Strengthening shareholders), Greater competition

5 10 15 70 76 80 82 85 88 93 96 97 1Q 97 2Q 97 3Q 97 4Q 98 1Q 98 2Q 98 3Q Source : cited from Rhee and Lee (98), Na and Moon (00)