South Korea Economic Crisis Case Study

968 Words4 Pages
In 1997 South Korea faced bankruptcy. This economic crisis was remarkable because it gave the biggest impact to South Korea. The unemployment rate increases because many employees loses work due to the economic crisis. Unwise lenders has the difficulty and careless in the banking system. While companies they simply invest too fast and too much. Moreover, this crisis is also combined of policy blunders, political, social and cultural. The major indicators was the exchange rate and the short term interest rate sharply rising and the stock market prices was falling. When the unpredictable mismanage their assets that cause a critical shock to asset prices. They become more risk averse. It also cause a downward pressure on asset price in the other country's market. The international investors have…show more content…
This would have stabilized the exchange rate and thus having less effect on Central Bank Reserve funds. Pass legislation to make difficult for Won to take out of the country by setting a threshold on amount that can be remitted or taken out of the country. This would create more demand for (Won) also would have prevented large outflow of funds. Government do not overly dependent on foreign investments and encouraging local investment. This can be done by raising tax on foreign investments and lowering tax on local investments. Moreover, not becoming too dependent on imports and raise exports. Imports become expensive when the (Won) depreciates. This will have direct impact on Central Bank Reserve. Encouraging exports will further increase the reserve. Lastly the government can restrict crediting of exports proceeds into foreign currencies accounts of the exporter by converting at least 75% of the foreign currency exports proceeds to

More about South Korea Economic Crisis Case Study

Open Document