Research On Relationship Between Financial Stability And The Flow Of Commercial Bank Loans After Asian Financial Crisis

South Korea is a very important country in Asia Pacific region, and it is well acknowledged by the academic world that its financial system has gained rapid development for the lasting 30 years. It showed two distinct conditions during two significant financial crises, i.e. totally collapsed in the Asian Financial Crisis and coped with 2008 Global Financial Crisis which shows the increasing developing and growth of South Korea’s banking. Meanwhile, it showed significant fluctuation during the period that it transferred from lend more to the households to lend more to the enterprises.This paper will base on the summary of the predecessors’ on the commercial bank loans and the concept of financial stability, the importance of financial stability, issues concerned, important factors as well as series of researches on the basis of the study results. Via studying of South Korea’s economic development issues in modern times, the development of South Korea upon its economy could be roughly divided into three phases, which can be attributed to three economic impacts. The three impacts are, President Park Chung-Hee’ being assassinated, the impact of the Asian financial crisis in 1997 and the impact of the 2008 global financial crisis. We take advantage of political, economic, social, cultural and other multi-dimensional backgrounds to analyze the fluctuation of loans happened during the second and third economic impacts.We then use an empirical analysis upon the relationship between the loan flows and financial stability and deliver necessary explanations to the corresponding conclusions.The detailed structure is as follows: in the introduction part, first elaborates the research background, significance and home and abroad researches’ results are reviewed. At the same time, the paper introduces the purposes, methods, content structure and the innovation of this paper. The first chapter reviews the development of the Korean economy and its characteristics, mainly from gross domestic product, the level of employment, inflation, interest rates on bank loans, the degree of dependence on foreign trade and these five indicators are described to lay the background upon times and the necessary preparations for the fluctuation of loans. The second chapter detailed the analysis of the Asian financial crisis in South Korea Commercial Bank loans’ change and its causes, this part through the analysis by multi-angles on the transformation of commercial bank loans to explain the shift between families and enterprises. The third chapter analyzes the connection between commercial bank loans’ change and the impact of South Korean financial stability. First of all, from the theoretical analysis of the relationship between the fluctuation of commercial bank loans and financial stability to explore the influence derived from commercial bank loans’ fluctuation to the financial stability of South Korea from a qualitative point of view. In addition analyzing the relationship between the two aspects. At last, exploring the commercial bank loan fluctuation’s other consequences. The fourth chapter is the conclusion and research prospect which show the conclusions of this study and puts forward the possible solutions and future research directions.