Introduction A banking system is an interconnection of many banks that are linked together by a uniform network to conduct the banking business. The banking business was majorly derived from the concept that some individuals in the economy may have excess money while others may be in need of money, therefore banks basically accept deposits and also lend or give out loans. The banking system of Korea is just one of the wider banking systems of the Far East Asia that have recently faced crisis majorly due to politics and bad governance. Roles played by a banking system to a countries economy The role of banking systems in any economy can never be underestimated since in today’s economies banks prove to be their backbones. The roles of the banking systems are not solely from the systems themselves but they derive them from the roles of banks. The major role of banking systems is to accumulate savings through banks which are in turn translated into investments which again busts the economy. The banking system has the central bank as the major player, followed by the commercial banks and non-bank financial institutions. The major functions of the central bank are the formulation of policies that affect the whole of the banking industry, they also regulate the other banks most so the commercial banks and act as the supervisors of the commercial banks and their operations, their lending and borrowing. They also advise them on viable projects that they can always undertake or invest their funds on. The central bank of a country allocates countries resources on the productive sectors of the economy through the use of the fiscal policy tools. Central bank again employs the stability tools to control money supply in the economy and therefore controlled inflation and hence stability in the economy. Commercial banks on the other hand have got roles that range between lending and accepting the deposits. They identify structure and extend the loans. They act as supervisors of non-bank financial institutions who are always not allowed to accept deposits; therefore they play the role of money that they lend out to them. Commercial banks also advice individuals on the kinds of loans available and the procedures of obtaining such loans. Banks themselves help boost the economy by themselves being investors; they invest the excess deposits in a variety of portfolio ranging from stocks and shares to developmental projects like in the real estate. Banks due to the emergence of risks that emanated from banks globalizing and internationalizing their operations have decided to devise risk departments in their organizations which are responsible for identification, classification and management of such risks that are likely to face financial institutions like the financial, inflation and foreign as well as exchange rates risks. Why and how was the crisis of the Korean banking system? The financial crisis that affected the banking systems in Korea originated from the failures that were initiated by the banks themselves. The banking industry is a very pillar of an economic system of any nation an any instability that surfaces it is normal likely to destabilize the economy of any country or region and to afar extent even result into a crush or crisis of a better part if not the whole fin