Top 5 Chaebol"s Role in the Economic and Financial Crisis

The top-five chaebol groups heavily overinvested prior to the October 1997 economic crisis at a level which cannot be rationally explained by regular fiscal criteria such as expected gains or potential sales growth.
In addition to that, they increased the amount of speculatve investments when there were clear danger signs apparent in the market.
The Korea Development Institute(KDI) issued its report of 'Practical Anaysis on Overinvestment of Chaebol before Economic Crisis' on April 5.
It asserted that 20 percent of the top five business groups' investment was of such high risk that the report states the chaebol groups might rather have had some expectations of the government bailing them out if they suffered huge losses.
As uncertainty increased, other groups reduced investment by 0.9 percent, but the big five raised investment 5 percent, and no definite reason can accout for it.
KDI hinted that the chaebol's excessive spending was one of the many factors precipitating the economic and financial crisis.
Hwashik Bong : trojans@joongang.co.kr