This ninth title in the series Studies in the Modernization of the Republic of Korea offers new insights into the role of finance in a rapidly developing country. Combining history and theory, it provides a rigorous test of previous theoretical propositions. The study illustrates the complexity of the Korean financial system and the danger of easy generalization from partial evidence.

The two major components of the financial system are brought into focus—one regulated and statistically recorded, the other unregulated, unrecorded. The burden of financial intermediation shifts from one to the other largely in response to government policy measures. By looking only at the regulated sector, previous studies have often misperceived the role of the financial system and the effects of government policies. The financial scandal in Seoul in May 1982 vividly demonstrated that the unregulated part of the system is still important and that overregulation of the “modern” part generates strong pressures for perpetuating the illegal, unregulated, “traditional” financial institutions.

Since the early 1980s, Korea’s financial development has been a tale of liberalization and opening. After the 1997 financial crisis, great strides were made in building a market-oriented financial system through sweeping reforms for deregulation and the opening of financial markets. However, the new system failed to steer the country away from a credit card boom and bust in 2003, a liquidity crisis in 2008, and a run on its savings banks in 2011, and has been severely tested again by the ongoing COVID-19 pandemic crisis. Financial liberalization, clearly, has been no panacea.

This study analyzes the deepening of and structural changes in Korea’s financial system since the early 1980s and presents the empirical results of the effects of financial development on economic growth, stability, and the distribution of income. It finds that, contrary to conventional wisdom, financial liberalization has contributed little to fostering the growth and stability of the Korean economy and has exacerbated income distribution problems. Are there any merits in financial liberalization? The authors answer this query through empirical examinations of the theories of finance and growth. They point to a clear need to further improve the efficiency, soundness, and stability of Korean financial institutions and markets.

The notion of the individual was initially translated into Korean near the end of the nineteenth century and took root during the early years of Japanese colonial influence. Yoon Sun Yang argues that the first literary iterations of the Korean individual were prototypically female figures appearing in the early colonial domestic novel—a genre developed by reform-minded male writers—as schoolgirls, housewives, female ghosts, femmes fatales, and female same-sex partners. Such female figures have long been viewed as lacking in modernity because, unlike numerous male characters in Korean literature after the late 1910s, they did not assert their own modernity, or that of the nation, by exploring their interiority. Yang, however, shows that no reading of Korean modernity can ignore these figures, because the early colonial domestic novel cast them as individuals in terms of their usefulness or relevance to the nation, whether model citizens or iconoclasts.

By including these earlier narratives within modern Korean literary history and positing that they too were engaged in the translation of individuality into Korean, Yang’s study not only disrupts the canonical account of a non-gendered, linear progress toward modern Korean selfhood but also expands our understanding of the role played by translation in Korea’s construction of modern gender roles.