The de jure financial system in Korea has moved from mainly R(relationship)-mode financial contracts towards M(market)-mode contracts since the 1997 financial crisis, due largely to reforms introducing Anglo-American style corporate governance and the disintermediation of the larger business groups in corporate financing. Analysis shows that the effectiveness of this change in improving firms' performances has yet to be demonstrated. Unlike the disintermediation of the big-name firms, the affiliates of small and medium business groups and small and medium-sized independent firms have relied heavily on bank loans and internal finance. The impact of a more concentrated banking system and intensified competition on the type of corporate investment has yet to be analysed.