Analysis On Financial Supervision Reform Of South Korea After The Asian Financial Crisis

The operation of financial market is closely related to the national economy ofone country, at the same time, stable situation of financial market can’t leave thefunction of financial supervision. In the development of economic globalizationnowadays, the economic connection between country and country is gettingincreasingly closer, while, the transmission speed of financial risks also faster.Financial crisis caused in one country will easily turn into financial market turmoil inglobal area. In such kind of situation, how to build an effective financial supervisionsystem, to maintain the stability of financial market has become an important issue inthe field of financial.In the1990s, the South Korea executed the financial separating supervisionmode. In this environment the government played an essential role, which led tochaos and low efficiency in division of work that made financial system extremelyfragile. After the Asian financial crisis in1997, the economy of South Korea gotseriously deteriorated. Devaluation became seriously, a lot of financial institutionwent bankrupt, and unemployment rate rose rapidly. In order to reverse such kind ofsituation, and to save the loss brought by the financial crisis, according to therequirement of IMF, the government of south Korea reformed its financialsupervision system on large scale. Which made great achievement in a short term,and South Korea was known as ‘the first one that run out of financial crisis in EastAsia’. Why did South Korea quickly get out of the shadow of the financial crisis?Could its financial supervision reform stand the test of time? What’s new problemafter such reform that South Korea would face? How did South Korea acted in thenew round of global financial crisis? What can we learn from this reform of SouthKorea? A series of problems are worth thinking carefully.This paper takes a comprehensive analysis on the financial supervision thatSouth Korea took after the Asian financial crisis in time term. Firstly, it reviews theexisting problem in the financial supervision system of South Korea before the Asianfinancial crisis, analyzes the motivation of the regulation both in intrinsic andextrinsic. Secondly, it represents the reform content in details from different angles.Wherein, legal measures include implement of new laws and adjustment of old laws,organizational measures include the establishment of Financial SupervisoryCommission and Financial Supervisory Service, the integration of deposit insurancebanking, mean measures include enhance of information disclosure system, theimplement of ‘regular rectification measures’, and strengthen on audit effort andfinancial specification standard. Thirdly, it analyzes the short-time results after thesupervision, compares the impact of the two financial crisis, tries to explore theability on fighting against financial risks and the reason why South Korea got out offinancial crisis in such a short time, along with the crisis in savings banks these yearsanalyzed defects of the reform. At last, it makes a summary of experience in thefinancial supervision reform of South Korea, combines which with current situationin China, puts forward proposal for future reform of our own.