This study aims to review the financial support provided to small and medium-sized businesses with a focus on loans from savings banks, and to seek ways to improve efficiency and develop small and medium-sized business financing. Over the course of Korea’s rapid economic growth, the benefit of the principle of economies of scale had been emphasized to foster the development of large conglomerates; this resulted in the relatively lackluster development of small and medium-sized businesses, which consequently only accounted for a small fraction of the overall economy. However, as the global economy entered the era of recession and technological innovation caused an active churn by the means of industrial restructuring in the late 1970s, the role of highly adaptive small and medium-sized businesses in the economy was placed under a new spotlight.
The government started pushing forward with economic reforms to correct the imbalance that resulted from the rapid economic development and to improve the sustainability of the economy in the 1980s. As of 1983, small and medium-sized businesses represented 97.4% of all businesses in number but they fell behind many economies from across the world, especially Japan and Taiwan, in terms of employment (54.8%), production (34.7%) and added value (37.2%). Furthermore, small-size businesses with less than 50 employees amounted to 78% of all small and medium-sized businesses (Mining and Manufacturing Industry Statistics & Small and Medium-size Businesses Survey 1982), which reflected how underdeveloped and old-fashioned Korea’s small and medium-sized businesses are. It goes without saying that economic reform requires the ever-more aggressive promotion of small and medium-sized businesses through multi-lateral support policies
The government implemented the “Small and Medium-size Business Promotion Act” and established the Small and Medium Business Corporation. It is also making efforts to strengthen support for small and medium-sized businesses by promoting subsidiary links between large conglomerates and small and medium-sized businesses, and by identifying and further fostering the growth of promising enterprises. The financial policy is also being revised to discourage the imbalance in the corporate loan system in favor of large conglomerates, to expand the funding available for small and medium-size businesses and to increase other related financial support. And the need for qualitative transformation, beyond the mere quantitative one, of the financial policy is ever-growing.
중소기업금융과 신용보증에 관한 소고(Essay on small and medium-size business financing and credit guarantee)
|Journal Title; Vol./Issue||한국개발연구:vol. 7(issue 4)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|