International Monetary FundWorld Bank2015-02-092015-02-092014-12https://hdl.handle.net/10986/21420Korea experienced a financial crisis in the late 1990s, which it overcame successfully. The rich experiences gained in handling past crises have helped in the establishment of a broad crisis management framework in Korea. The successful management of the 1997 financial crisis is reported to have been guided by the following principles: (i) bold and decisive measures are required to regain market confidence, rather than incremental ones; (ii) though Government will take the lead in crisis management initiatives, private capital should be encouraged to fully participate in the process; (iii) bank recapitalization and creation of a bad bank are not mutually exclusive options; the crisis management measures should be politically acceptable and have built-in exit strategies with clear time-frames; (iv) moral hazard should be minimized; and (v) all forms of financial protectionism must be rejected. Korea responded to the 2008 global financial crisis with certain policy measures that helped the Korean financial and real sectors to weather the immediate effects of the global crisis. These included policy and financial support to stabilize the money, securities, and bond markets, to extend financial support to corporate and financial entities, and to support small and medium enterprise (SME) and micro finance sectors. The authorities introduced a series of measures to contain the stress in Mutual Savings Banks (MSBs) during 2011 and 2012 and turned them around. The stress in MSBs was largely due to an extensive industry-wide exposure to troubled real estate project financing as well as shareholder and management misconduct.4 Faced with sector-wide stress and declining depositor confidence the financial sector regulatory agencies jointly announced new mitigating measures for the MSB sector.en-USCC BY 3.0 IGOACCEPTABLE COLLATERALACCOUNTINGASSET MANAGEMENTASSET MANAGEMENT COMPANIESASSET QUALITYASSET STRIPPINGBALANCE SHEETBANK BRANCHESBANK DEPOSITBANK DEPOSITSBANK HOLDINGBANKING CRISISBANKING INSTITUTIONSBANKING SECTORBANKING SECTOR ASSETSBANKING SECTORSBANKING SYSTEMBANKRUPTCYBANKRUPTCY DECLARATIONBILLS OF EXCHANGEBONDBOND MARKETBOND MARKETSBONDSBROKERSBUSINESS ACCOUNTINGCAPITAL MARKETCAPITAL MARKETSCENTRAL BANKCENTRAL BANKSCERTIFICATES OF DEPOSITSCOLLATERALCOLLECTIVE INVESTMENTCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL PAPERSCONTINGENCY PLANNINGCORRECTIVE ACTIONCORRECTIVE ACTIONSCREDIBILITYCREDIT CARDCREDIT COOPERATIVESCREDIT MARKETCREDIT POLICIESCREDIT UNIONSCREDITORSCREDITSDEBT ACCUMULATIONDEBT MATURITYDEBT RESTRUCTURINGDEPENDENTDEPOSITDEPOSIT INSURANCEDEPOSIT INSURANCE AGENCIESDEPOSIT INSURANCE AGENCYDEPOSIT INSURANCE FUNDDEPOSIT INSURANCE SYSTEMDEPOSIT INSURANCE SYSTEMSDEPOSIT INSURERSDEPOSIT PROTECTIONDEPOSITORDEPOSITORSDEPOSITSDEVELOPMENT BANKDISBURSEMENTDISBURSEMENT OF FUNDSDISSOLUTIONDISTRESSED BANKDUE DILIGENCEELIGIBLE DEPOSITORSEMERGENCY LIQUIDITY SUPPORTESTATEEXTERNAL DEBTEXTERNAL DEBTSFEDERAL DEPOSIT INSURANCEFINANCIAL CRISISFINANCIAL DISTRESSFINANCIAL INFORMATIONFINANCIAL INSTABILITYFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL POSITIONFINANCIAL SECTOR REGULATIONFINANCIAL SERVICESFINANCIAL SITUATIONFINANCIAL STABILITYFINANCIAL STRUCTUREFINANCIAL SUPPORTFINANCIAL SYSTEMFINANCIAL SYSTEM STABILITYFINANCIAL TRANSACTIONFISCAL POLICIESFOREIGN BANKFOREIGN COMPANIESFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN FINANCIAL INSTITUTIONSFRAMEWORK FOR SECURITIESFUTURESGOVERNANCE STRUCTUREGOVERNMENT BONDSGROSS DOMESTIC PRODUCTHOLDING COMPANIESHOLDING COMPANYHOUSEHOLD DEBTINDIVIDUAL BANKINFORMATION SYSTEMINFORMATION TECHNOLOGYINSOLVENTINSOLVENT BANKINSOLVENT BANKSINSTITUTIONAL FRAMEWORKINSURANCE COMPANIESINSURANCE CORPORATIONINSURANCE POLICIESINSURANCE PREMIUMINSURANCE PREMIUMSINTEREST PAYMENTSINTEREST RATEINTERNATIONAL SETTLEMENTSINVESTOR PROTECTIONISSUANCEJURISDICTIONJURISDICTIONSLEGAL FRAMEWORKLEGAL POWERSLENDERLENDER OF LAST RESORTLEVIESLIABILITYLIFE INSURANCELINE OF CREDITLIQUIDATIONLIQUIDITYLIQUIDITY RATIOLIQUIDITY SUPPORTLOCAL CURRENCYLOCAL GOVERNMENTMANDATEMANDATESMARKET CONFIDENCEMARKET DISCIPLINEMARKET INFRASTRUCTURESMARKET LIQUIDITYMARKET PLAYERSMARKET SHAREMARKET SHARESMERGERMERGERSMICRO FINANCEMICRO FINANCE SECTORSMINIMUM CAPITAL RATIOMONETARY FUNDMONETARY POLICYMONEY MARKETMONEY MARKETSMORAL HAZARDMORTGAGE LOANSMUTUAL SAVINGSNON-PERFORMING LOANNON-PERFORMING LOANSNPLOPEN MARKETOVERSIGHT OF BANKSPAYMENT SYSTEMSPOLICY RESPONSEPOLICY RESPONSESPOSTAL SAVINGSPREFERENTIAL PAYMENTSPRICE STABILITYPRIVATE CAPITALPROMISSORY NOTESPUBLIC FUNDSRECAPITALIZATIONREPAYMENTREPOSRESERVERESERVE REQUIREMENTSRESERVESRESIDENTIAL MORTGAGERESTRUCTURING PROCESSRETURNRISK FACTORSRISK MANAGEMENTRISK PROFILESAFETY NETSALE OF SECURITIESSAVINGS BANKSAVINGS BANKSSECURITIESSECURITIES HOLDINGSECURITIES INVESTOR PROTECTIONSECURITIES MARKETSSETTLEMENTSETTLEMENT SYSTEMSHAREHOLDERSHAREHOLDER EQUITYSHAREHOLDERSSOLVENCYSTOCK MARKETSTOCKSSUPERVISION OF BANKSSUPERVISORY AGENCIESSUPERVISORY AUTHORITIESSUPERVISORY AUTHORITYSUPERVISORY POLICIESSUPPORT TO BANKSSWAPSYSTEMIC STABILITYTRANSACTIONTRANSPARENCYUNSECURED CREDITORSVALUATIONWITHDRAWALWITHDRAWAL OF FUNDSWORKOUT10.1596/21420