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When the Republic of Korea accepted a $57 billion IMF bailout in December 1997, an era had ended for Korea as well as for international equity markets. Like the other East Asian “Tigers,” Korea began to experience economic difficulty in 1996. The booming growth rates of the previous decades slowed in 1996 and early 1997 saw large-scale bankruptcies of important firms in all sectors of Korea's economy. The severe economic downturn strained Korea's financial sector and serious underlying problems were revealed. By late summer of 1997, foreign portfolio investments were accelerating out of Korea, both instigating and exacerbating the devaluation of the won. As the liquidity shortfalls of the Korean financial sectors reached critical levels, the IMF stepped in and provided $57 billion in loans to Korea in December. This action represented the largest inflow of IMF funds extended so rapidly. This paper presents a summary of the Korean financial crisis, surveying the composition of the Korean Stock Market and trends in foreign investment at the time of the crisis, then turning to causes of the crisis, an overview of major IMF and Korean government mandated policy changes, and finally recommendations for further reform. [ABSTRACT FROM PUBLISHER]