After a long-sustained boom, the Korean economy shifted to a recession from the second quarter of 1988. This was mainly attributable to adverse changes in the economic environment such as the appreciation of Korean won, wage hikes and the rising protectionism of industrial countries. Small and medium enterprises have less capability of surviving in this adverse environment than large enterprises, because of their limited capital and disadvantage in raising funds.
Furthermore, on the financial side, financial liberalization including the deregulation of loan rates is liable to make it more difficult for small and medium enterprises to raise funds from the financial institutions, which are inclined to apply higher lending rates, or are reluctant to lend, to small and medium enterprises whose credit standing is often low. ... (이하 생략)