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Financial Liberalization and Economic Development in Korea, 1980–2020

Financial Liberalization and Economic Development in Korea, 1980–2020

Yung Chul Park, Joon Kyung Kim, Hail Park

ISBN 9780674251281

Publication date: 03/30/2021

Since the early 1980s, Korea’s financial development has been a tale of liberalization and opening. After the 1997 financial crisis, great strides were made in building a market-oriented financial system through sweeping reforms for deregulation and the opening of financial markets. However, the new system failed to steer the country away from a credit card boom and bust in 2003, a liquidity crisis in 2008, and a run on its savings banks in 2011, and has been severely tested again by the ongoing COVID-19 pandemic crisis. Financial liberalization, clearly, has been no panacea.

This study analyzes the deepening of and structural changes in Korea’s financial system since the early 1980s and presents the empirical results of the effects of financial development on economic growth, stability, and the distribution of income. It finds that, contrary to conventional wisdom, financial liberalization has contributed little to fostering the growth and stability of the Korean economy and has exacerbated income distribution problems. Are there any merits in financial liberalization? The authors answer this query through empirical examinations of the theories of finance and growth. They point to a clear need to further improve the efficiency, soundness, and stability of Korean financial institutions and markets.


  • A welcome and ambitious volume.

    —Peter J. Morgan, Developing Economies


  • Yung Chul Park is Distinguished Professor in the Division of International Studies at Korea University.
  • Joon Kyung Kim is President of and Professor at Korea Development Institute School of Public Policy and Management.
  • Hail Park is Professor in the Department of International Commerce, Finance, and Investment at Kyung Hee University.

Book Details

  • 336 pages
  • 6 x 9 inches
  • Harvard University Asia Center