Corporate Governance in the Republic of Korea and Its Implications for Firm Performance

Abstract

Firm measures had to be taken to prevent further deterioration of the corporate sector and the problem of non-performing loans. Instead, banks kept extending further credits to those firms that were essentially bankrupt and had little possibility of being viable again on their own. The combination of large-scale corporate failure and bank failure led to the loss of confidence in the Korean economy by the international financial community, triggering the foreign exchange crisis, which quickly spread into a domestic financial crisis.