This study investigates the influences that the environmental changes of the financial market have had on the merchant banking industry, and determines the appropriate role of the merchant bank in light of these changes.
The merchant bank played an important role in the economy of the 1970s, a time of demand for changes in the processes for introducing foreign capital and other international finance. However, today’s merchant banks are inadequate in adopting advanced financial techniques and in satisfying the financial demands of businesses. The company’s tasks were mostly short-term banking at the beginning, which covered a large portion of foreign loans in the early 1980s. Lately, leasing and Certified Management Accountancy sectors in the merchant banks are becoming important. There are many factors why the merchant bank failed to become established as a complex financial service institution via corporate management consultation, but the primary factor was the Korean business and finance environment.
Korea’s financial industry is expected to undergo significant qualitative and systematic restructuring. First, the basis for currency and foreign exchange operations by market function based on the Korean economy’s international balance of payment surplus, the stabilization of prices, and continuing partial deregulation. Second, it is expected that the contemporary monopolistic structure of finance, will be subject to significant change.
These changes in the domestic and foreign environments are expected to effect the role of the merchant bank in the Korean economy. With the low barrier to entry and sidelining trends, the financial industry will reduce the comprehensive benefits the merchant bank has enjoyed. Their role as the gateway to foreign capital has faded, and their relative status in international finance will be weakened as other financial institutions enter international business.
On the other hand, the investment and financial environments for future companies are becoming much more complex, risky, and globalized. The demand of expert institutions supplying comprehensive financial services to companies will increase.
In order for the merchant bank to fulfill this demand, it is necessary for financial authorities and the merchant banking industry adapt to the modern market. In the process of financial reform focused on easing regulations in order to lower the entry barriers to the banking market and expanding areas of business, financial authorities should establish a framework for the merchant banks to fulfill their expected roles. This can be accomplished by easing the capital fund and business limitations, and the regulations regarding core tasks required to sufficiently satisfy complex banking demands. The merchant banking industry must implement a business basis for domestic and foreign finance, capital and foreign exchange, develop new financial products or techniques, and hire expert personnel.
금융환경변화와 종합금융회사의 위상(Financial environmental changes and the status of merchant banks)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|