Development, Present Status and Some Prospects of the Financial Markets in Korea

This paper describes the historical background and the present structure of Korea's financial markets to provide the basic understanding of issues facing the Korean financial system. The financial system in Korea has been introduced and developed to serve specific political or economic purposes, putting the financial markets in a tight control of government. As a result of the government-controlled financial policies market mechanism has oftentimes been ignored or distorted, making the Korean financial market inefficient and not competitive. To increase the efficiency of the financial system the Korean government plans to launch a Big Bang style financial reform. Attention is paid to the ongoing efforts of the Korean government for financial reforms. As the financial reform takes effect in the near future there will be far fewer regulations and government interventions in financial sector.