Think tank laments South Korea’s uncompetitive financial industry

Industry urged to revamp governance and put determined effort on overseas expansion.

The head of a state-run think tank recently claimed that regulators and employees of the nation’s financial industry are not diligent enough, causing its standards to lag 30 years behind the norms of advanced countries.

In a contributing column in for September to “Listings,” a monthly magazine, Kim Tae-joon, who heads the Korea Institute of Finance, argues, “Korean banks have competed in lending more on the domestic market, resulting in a similar earning structure and therefore making them vulnerable to outside shocks.”

Regarding regulators, Kim said, “All are oriented for short-term performance, depriving them of a long-term strategic vision.”

He called for the revamping of their governance and a more positive effort to expand overseas. 

Kim also came up with reasons for each of the latest three financial crises Korea has undergone.

For the 1997 currency crisis, the cause was financial institutes lending in order to help the nation’s economic growth often in violation of market principles; the 2003 crisis was attributable to excess credit card loans and cash advances; and the 2008 crisis stemmed from the lack of liquidity that in the end brought in government efforts to supply it. 

View the full story in Korea Times.