Market-oriented financial system and bank-oriented financial system have their own advantages and disadvantages and thus need to carefully consider their proper functions. Market-oriented financial system, which focus on autonomy of corporate management, captures effectiveness of regular corporations, but may be ineffective to over-investment of insolvent enter- prises. Bank-oriented financial system does not have problems with over- investment of insolvent enterprises but may be ineffective in ways that it could bring under-investment of regular corporations. In Korea, both systems are relatively effective and market-oriented financial system has improved noticeably since the currency crisis. Especially corporations with high finan- cing with securities are thought to be regular corporations and also in active investment. Banks build governance of stock holders through debt equity swap, and bank loans are more utilized as a control system rather than a financing mechanism. Under the system of financial holding company, the banking industry may function both commercial and investment banks; and local banks and saving banks may function as commercial banks special- izing in their regional financial services.