The paper provides new insights into the role of financial liberalization in the South Korean financial crisis using a number of novel approaches. Firstly, primary information regarding the relaxation of financial restraints, such as interest rate ceilings, capital controls and reserve requirements, is collected and summarised. Secondly, this information is used to construct summary measures of financial liberalization. Thirdly, qualitative information on the role of financial liberalization in the financial crisis is presented from a new survey of 44 IMF, World Bank and Korean officials who had direct exposure to the events surrounding the financial crisis. Fourthly, the effects of financial liberalization on the evolution of banking and financial risks are estimated utilising a conditional CAPM with time-varying market risk. Finally, qualitative and quantitative findings are juxtaposed, allowing insights into the extent to which financial markets recognized the increased banking and financial risks, which emanated from financial liberalization
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