The research in question, a case study having its theoretical grounds set on policy instrument theories and aiming at the two-step financial reform policies, is mainly to highlight the policy instruments opted for by the government in its two-step financial reform before evaluating appropriateness of the same. The case study combines both the theories and practices before applying the criteria erected by the theories on financial industry analyses. By producing political proposals, both government policies and policy approaches being implemented could result in effectively solving the problems local financial holding companies are dealing with at this time.
The theoretical analyses of policy instruments have made it clear that the policy instruments opted for by the government come mainly based on the spectrum model created by Howlett and Ramesh. On the other hand, Complexity of Subordinate Political Systems and National Capability Degree are taken as criteria for introduction of policy approaches. However, in terms of policy implementation, throughout the practice, hybrid and forcible tools remain as key players in the government operations practiced on the twelve financial institutions having major government participations. As of the private financial institutions, hybrid tolls prevail as voluntary and forcible ones serve as secondary ones.
Though a fine initiative launched by the government, both the objectives and implementation methods set for the two-step financial report are yet to be properly reviewed for improvement. For instance, one of the four major objectives is to cut the financial institutions having major government participations by half by the end of 2005 is viewed as a poorly prepared one for its tight timing, restrained policy objectives that make successful implementation inaccessible for less flexibility, reason why the policy instruments implemented by the government in the last period of its second financial reform failed to meet the policy objectives.
Accordingly, timely and quantitative objects should be orderly and slowly implemented rather than being achieved in one operation. The government is suggested to honor the market systems by weighing more voluntary approaches and having hybrid approaches as secondary ones and, when necessary, launching timely and quantitative objects by incorporating forcible approaches. Further, financial reform policies implemented by other countries, namely, U.S., United Kingdom and Japan among others, shall be taken as reference. Appropriate practices and manners for mergers of financial institutions shall allow adjustments resulting in retaining the advantages and eliminating the defects; by doing so, the policy instruments would more effectively meet the objectives.