The Analysis Of Regulatory Adjustments And The Effectiveness In Korea’s Short-term Capital Flows

This paper compared the supervisions and the validity of short-term capital flows inKorea,based on the east Asian financial crisis and the global financial crisis. It ishonoured that the short-term capital is the main factor in the financial crisis.It affects themacro economic through the stock market,financial institutions and the entity economy.Before the Asian financial crisis,the capital marcket of South Korea was openedexcessively.When the financial crisis happened,it suffered a lot.So Korea realized theimportance of regulations.On the one hand,it provided liquidity for the capital markets,on the other hand,it made effort on the the capital controls.All these measures made thecapital market recover quickly. But in the process of management, South Korea reliesheavily on foreign capital inflows.As a result, a large amount of capital flowed out in2008when the subprime crisis happened.The capital market was unrested and suffered alot. After the global financial crisis in2008,South Korea took some measures to make theadjustment in capital structure, currency exchange agreement and monetary policies.These adjustments improved the health of capital market.We can draw the conclusionthat the supervision of short term capital is a necessity in financial crisis.