Chaebol, Financial Liberalization, and Economic Crisis: Transformation of Quasi-Internal Organization in Korea

This paper argues that the Korean governmentís policy with regard to financial deregulation and liberalization was endogenously determined, being largely influenced by the interest politics of perhaps the most powerful interest group in Korea, chaebol. It also argues that the cause of Koreaís financial crisis of 1997-98 cannot be analyzed without first examining the influence of chaebol on the post-1993 financial liberalization, which planted the seeds of the crisis. The paper concludes that financial liberalization undertaken in a haphazard manner, manipulated by a few dominant players in the economy runs into the danger of producing an outcome worse than before.