We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

South Korean Financial Crisis - Case Study Example

Comments (0) Cite this document
In this case study the author aims to outline the chronology of the events that took place leading to the eventual financial crisis and in continuation, identifies and discusses the causes and effects of the Financial Crisis based on the South Korean economy…
Download paper
South Korean Financial Crisis
Read TextPreview

Extract of sample
South Korean Financial Crisis

Korea was progressing well in 1996 and had become a part of the Organisation for Economic Cooperation and Development (OECD). As people celebrated, nobody knew of the impending disaster about to strike. During the latter part of 1996, the current account deficit increased to 5% from previous year’s 2%, a decrease attributed to lessened competition among Korean industries. The GNP declined from 14.1% to become 7.1% and foreign debt rose to a high 100 billion dollars. These and various other debt related indicators were showcasing the upcoming crisis for Korea. The first half of 1997 surfaced a few more indicators of the disaster. Foreign investors in Korea were starting to get wary of the market and lacked confidence in investing because of long recessions, large deficits in current accounts and growing short-term external debt. In January 1997, Hanabo Steel, the 17th largest Korean seller went into bankruptcy. Soon the Sammi Group, another steel company, failed and major affiliates of the Jinro Group went bankrupt. In July 1997, another major automobile manufacturer, Kia motors failed. With the downfall, foreign capital began to flow out of the country. In July 1997, the Southeast Asian crisis broke out first in Thailand, followed by Indonesia, Malaysia and in Hong Kong in October as the stock market crashed. Within October to December, the Korean economy crashed by 112% compared to the US Dollar. ...
Within October to December the Korean economy crashed by 112% compared to the US Dollar. From October 1997, the yield spreads of the global bonds of Korean Development Bank (KDB)3, Korea's indicators of the sovereign risk premium, started to jump. By early December, Korea's bonds were reassessed by Moody's and Standard & Poor's and were demoted to junk bonds from their A1 status.

Soon the banks could not renew the maturing loans and needed to withdraw from the Korean markets. Foreign lending crashed from the $100 from January to October 1997, to minus $20 billion by the end of the year. The won plunged lower to 50% in a span of two weeks in the month of November. As of November 1997, foreign reserves were seen to stand at 24.2 billion dollars, of which only 9.3 billion dollars was finally available. The figure was much lower than the required foreign reserve level of 36 billion dollars. Korea did not have enough money to repay back its 10 billion dollars short-term borrowings. At the edge of sovereign default, foreign debt touched highs of 119.7 billion dollars and the whirlpool of the crisis was pulling in Korea.

The Causes and effects of the Crisis
The causes that led up to the crisis were many and experts state that a single cause cannot be pinpointed as the culprit. While the economy crashed along with that of other nations, many experts also state that the currency crisis in Korea is quite different from other traditional situations. This crisis had little to do with the mismanagement of monetary and fiscal policy. The macroeconomic fundamentals were also good. The effects were as diverse too, but boiled down to the financial destruction of Korea. However like every failure or ... Read More
Cite this document
  • APA
  • MLA
(“South Korean Financial Crisis Case Study Example | Topics and Well Written Essays - 1500 words”, n.d.)
Retrieved from https://studentshare.net/politics/272745-south-korean-financial-crisis
(South Korean Financial Crisis Case Study Example | Topics and Well Written Essays - 1500 Words)
“South Korean Financial Crisis Case Study Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.net/politics/272745-south-korean-financial-crisis.
  • Cited: 0 times
Comments (0)
Click to create a comment
Financial Crisis Assignment
Economist and various financial experts have given it different names including credit crunch, liquidity crisis, and global financial recession. From what started as a credit crunch situation in some markets such as the housing market, it soon spread to other commodity markets and took over the whole world by surprise.
5 Pages(1250 words)Case Study
In 2007 and 2008, the United States experienced a significant volume of defaults on sub-prime mortgage loans that was caused by high inventories of homes available on the consumer market that created incentives for lenders to offer mortgages to individuals without necessarily sustaining good credit or adequate financial resources.
8 Pages(2000 words)Case Study
International Finance and Financial Crisis
In an outstanding work on the ways of handling the crisis by an organisation, Dominic Barton and his co-authors (Roberto Newell and Gregory Wilson) prescribed five ways of handling financial crisis (Barton, et al., 2002, pp.90-108). Understand and maximise the current cash positions - In the theory it is prescribed that the outset the company should have a clear understanding of its present cash position.
18 Pages(4500 words)Case Study
Financial Crisis in South Korea
Asian entrepreneurs and political leaders received lauding for their economic decision to cooperate with the European and American financial institutions in order to restructure their economies in the worldwide market. The growth of the emerging market economies was so rapid that they were seen as market models.
9 Pages(2250 words)Essay
The South Korea Financial Crisis
According to Chopra et al., keys to restructuring in South Korea include “promoting greater competition…improving corporate governance, which includes education…and improving capital structure and profitability.” This will be the focus of this inquiry into South Korea’s financial crisis of 1997 and its recovery, which is the stated purpose herein.
34 Pages(8500 words)Dissertation
Managing the Asian Meltdown
Furthermore, park focused on family conglomerates known as Chaebol to drive the economy of South Korea (Corning 2). However, the global economic changes of
4 Pages(1000 words)Case Study
Financial Crisis 2007-09
The financial collapse was worsened by the financial institutions ability to use the loopholes existing in capital regulation. Banks increased debt while maintaining their capital requirements. This was made possible by moving assets into special
1 Pages(250 words)Case Study
Financial crisis 2008 for corporate governance & ethics course
The 2008 financial crisis is one of the main ethical case studies owing to the global implications that result from the decisions made by people against the ethical requirements in the society. The 2008 financial crisis is well highlighted by moral
2 Pages(500 words)Case Study
The crisis is largely attributed to increased mortgage defaults that apparently mushroomed after securitization, an innovation that was envisioned to improve the performance and operations of the
4 Pages(1000 words)Case Study
Internationalizing The Business Curriculum: A South Korean Case Study
to be emphasized upon – the need to have knowledge about cultural variations in different countries along with economic environments in domestic and global arena, and the need to develop problem solving skills. The need of international study of business grows from the
2 Pages(500 words)Case Study
Let us find you another Case Study on topic South Korean Financial Crisis for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us