Restructuring Korean Banks' Short-Term Debts in 1998 - Detailed Accounts and Their Implications
Korean Crisis and Recovery, David T. Coe and Se-Jik Kim, International Monetary Fund aand Korea Institute for International Economic Policy, 2002
71 Pages Posted: 6 Oct 2004
This paper provides detailed accounts of the Korean banks' debt restructuring process in the first half of 1998. The paper hopes to serve as a future reference for those policy makers who might later face a similar problem. To this end, the paper turned out to be a case study with detailed accounts of events, explanations of major decisions, the logics behind them, and some anecdotes. A unique aspect of this paper is that it describes the event from the debtors' perspective unlike existing works written from the perspective of creditors or of an international organization. The paper also uncovers the process Korean government had to take after a basic agreement had been reached in New York, the process of which is not well known to the public yet. The paper also attempts to provide some useful statistics regarding the effect of government guarantees. It shows that, contrary to expectations, moral hazard did not reemerge among the creditors and the debtors.
Keywords: debt restructuring, currency crisis, banking crisis, Korea, negotiation
JEL Classification: F32, F34
Suggested Citation: Suggested Citation