1. Introduction -- 2. Pre-crisis financial system in Korea -- 3. The nature of the crisis and reform environment -- 4. The politics of reform in the transition period -- 5. Financial sector reform and the role of foreign capital -- 6. Conclusion

A lending boom is reflected in the composition of bank liabilities when traditional retail deposits (core liabilities) cannot keep pace with asset growth and banks turn to other funding sources (non-core liabilities) to finance their lending. We formulate a model of credit supply as the flip...