THE KOREAN BANKING system should be a lot healthier than it is. Since 1998, following the regional financial crisis, the country’s banks have been in constant merger mode. Twenty-seven banks have been reduced to just 11 under government pressure for them to strengthen capital adequacy ratios and improve lending practices.
Despite these efforts, though, Korea’s banks have been slow to learn lessons about lending but quick to find new ways to lose money.
It’s not entirely their own fault: the government is unable to stop tinkering with a sector that most developed countries have long concluded operates most effectively independently of political interference.
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