Corporate financial structure of South Korea after Asian financial crisis: the chaebol experience

1 Background The chaebol, a South Korean form of business conglomerate, has been a key factor in the country’s economic growth. In general, a group of large-scale, family-run management enterprises is referred to as a chaebol. Jones and Sakong (1980) defined a chaebol as the Korean term for a conglomerate of many companies clustered and managed by one family-centered parent company. The characteristics of a chaebol are similar to those of the zaibatsu of pre-war Japan. According to Kim (2000), the ratio of capital to bank loans of chaebol is higher than that of the pre-war zaibatsu. The birth of the chaebol dates back to the 1950s or earlier in Korea. However, it was not until the early 1980s that they emerged as entities that enjoyed a monopolistic concentration of capital. Many firms appeared in Korea in the 1950s, with some of them accumulating a huge influx of wealth. The chaebol were formed during the rule of Syngman Rhee, supported by the sale of property formerly owned by the colonial Japanese government, foreign aid, and an import-substitution industrialization policy (Choi 2007). When Park Chung-hee came to power in 1961, a policy of industrialization and Abstract