Regulated Deregulation of the Financial System in Korea

This paper examines the anatomy of the Korean financial reform policy since 1974 in order to place its financial reform plan of 1993 in the right perspective. It starts with a conceptual framework which provides a rationale for why the financial liberalization in Korea proceeded gradually with government guidance which was market-conforming. It argues that the Korea ' s approach to regulated financial reform was rooted in its institutions, history and its peculiar genius to devise non-market institutions as complementary and supportive to the market system. After surveying Korea ' s progress in financial system liberalization, the paper focuses on Korea ' s blueprint of complete deregulation introduced in 1993 and brings out its underlying logic. It however adds a caution that the Korean model is not possible to replicate in other developing countries.