The purpose of this study is to analyze national economy of the stock market and its current status, and propose recommendations to improve regulations on securities supervision.
In terms of size, Korea’s stock market ranks one of the highest among emerging capitalist markets. The number of listed companies, the composite price index of stocks and total market value of listed shares increased dramatically in the 1980s. Also, the rate of GNP per market capitalization was comparable to other developed countries except for Japan. By 1980s, both internal and external factors contributed to the growth of the financial industry. Internally, due to current account deficit, the money flow pattern has changed and also the government decided to focus on distribution of funds through the capital market rather than direct distribution by the government. In a meanwhile, externally, expansion of financial innovation, integration and securitization took large part.
Adjustments in division of labor amongst financial sector can be divided into three steps; increasing competitiveness within the financial sector, collaboration between non-monetary institutions, and gradual improvement in both bank and stock since its division. It is expected that by early 2000, Korea’s capital market size will be almost close to major markets in the world such as Japan, the United States, and the United Kingdom.
In order to develop Korea’s stock market, there are several mid-term strategies that can be considered. For effectiveness of the market, improvement in the transaction and information system, and stabilization of the market is needed. To develop competitiveness within the market, the industry should allow entry of new market and improve the commission system. Furthermore, in order to gain public confidence, the investor protection system and regulation on insider trading needs to be strengthened, and to increase the role of stock companies and its infrastructure, there is a need to foster expert human resources and diversification..
Since 1992, as Foreign Direct Investment and foreign stock companies are allowed in Korea, there are several measures to be revised. Korea should open its market by stages, and in the early days, it should limit stock holdings and outside trading so that there is no confusion within Korea’s stock market. Moreover, it is recommended that vitalization of a bond and unlisted market, deals in future and option, financial advisory and development of security finance should be considered.
증권산업발전을 위한 연구
서울 : 한국개발연구원
|Series Title; No||연구보고 / 90-06|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KDI; KDI School|