Title : Korea’s Economic Policy Changes: Reflected in the Corporate Financial Indicators During the Last 60 Years

Author : Yoon-Je Cho(BOK), Yeonkyo Choi(BOK)

This paper presents a comprehensive analysis of the growth, profitability, and changes in the financial structure of Korean companies, specifically manufacturing firms, over the past 60 years. The study utilizes the Financial Statement Analysis reports published by the Bank of Korea from 1961 to 2021. It investigates the influence of government-led economic development strategy, policy loan support, and changes in the financial market structure on the corporate financial structure during different time periods. The first chapter focuses on the 1960s and 1970s, characterized by a government-led financial system and the emergence of chaebols. The second chapter examines the period from 1980 to 1997, which saw efforts to combat inflation, gradually open financial markets, and reduce policy loan support. The third chapter analyzes the changes following the 1997 foreign currency crisis, including the complete opening of the capital market, strengthening of financial supervision and accounting disclosure standards, and increased stability of the corporate financial structure. The fourth chapter explores the impact of the COVID-19 pandemic on corporate financial indicators. Finally, the fifth chapter discusses the overall interactions among government policies, the financial sector structure, and corporate financial indicators throughout Korea’s rapid economic growth period and various economic crises. The findings shed some light on the evolution of Korean companies’ financial structure and offer insights into future challenges and tasks.