The financial sector in Korea has undergone significant structural change since the financial crisis of 1997. The industry is much more sound as numerous nonviable financial institutions have long since exited the market, and the stronger financial institutions have expanded in size and entered new financial businesses. This vast change was naturally attended by widespread uncertainty, causing investors to shift their assets en masse into banks. Investors considered banks as safe havens as they were at the heart of the large business groups and had completed the restruc- turing process earlier than other financial institutions. Because of this vast shift, banks became awash in deposits and the restructuring of non-financial institutions became delayed, raising uncertainties about the future prospects of the latter.
In response to the competitive threat from banks, non-banking financial institutions, including brokerage and insurance companies, strived to develop new products and services and called for the removal of the restrictions on financial institutions against entering the core businesses of other types of financial institutions, especially those of banks. This led to a new round of debate on the merits of the restrictions on the business lines of specific types of financial institutions. Should a brokerage house be permitted to handle payments and settlements, which have long been recognized as a core business of commercial banks? What problems might occur in the introduction of a narrow banking system? To what extent should insurance companies be permitted to offer bancassurance?
Such questions are very important in the sense that mutual entry into the core businesses of other types of financial institutions would likely have significant ramifications for financial soundness and sustainable growth. This report discusses those financial businesses where there is dire need for improvement, and considers the possibilities and limitations of allowing mutual integration. It analyzes the risk of financial behaviors in the financial sector and draws conclusions on the degree to which a financial institution can engage in both its core business and businesses that have traditionally been the domain of other types of financial institutions. When conflicts of interest occur in mutual integration of some combination of distinctive businesses, it seeks to determine what type of Chinese wall should to be erected. This type of study addresses the institutional aspects of finance and seeks to discover the fundamental properties of financial businesses.
금융업무의 특성과 겸업화 방향(Characteristics of financial businesses and the prospects for universal banking in Korea)
|Series Title; No||금융조사보고서 / 2005-11|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|