The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to President
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to President
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
  • Login
  • Register
  • Login
  • Register
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
  • 1

    Revised Japanese textbooks distort wartime forced labor, catching Korea off guard

  • 3

    Actor Yoo Ah-in once again apologizes for alleged drug use

  • 5

    Korea to ease entry rules to boost tourism, domestic spending

  • 7

    Gold price nears all-time high amid financial jitters

  • 9

    Ramsar wetland in Han River cleaned up for protected birdlife

  • 11

    Civic groups in Gwangju await meeting with Chun Doo-hwan's grandson

  • 13

    BTS' Jimin tops Spotify's global chart with 'Like Crazy'

  • 15

    Over 1,000 financially vulnerable Koreans apply for new emergency gov't loans

  • 17

    Suspect identified in Nashville school shooting that killed 3 children, 3 staff

  • 19

    Ra Mi-ran, Lee Re to lead fantasy drama 'The Mysterious Candy Store'

  • 2

    Chun Doo-hwan's grandson apprehended at Incheon Int'l Airport over drug use

  • 4

    Clock ticks for China's massive repatriation of N. Korean defectors

  • 6

    'My ID is Gangnam Beauty' to be adapted into live action series in Thailand

  • 8

    BMW launches new XM

  • 10

    North Korea unveils tactical nuclear warheads

  • 12

    CJ CheilJedang sees chicken as next big seller after frozen dumpling

  • 14

    From IVE to NCT DOJAEJUNG, K-pop hotshots brace for April chart race

  • 16

    2024 budget to focus on tackling low birthrate

  • 18

    INTERVIEWChoi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'

  • 20

    Samsung Pay partners with Hana Financial to issue student IDs

Close scrollclosebutton

Close for 24 hours

Open
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to President
  • Letter to the Editor
Thu, March 30, 2023 | 14:04
Columns
In the name of 'gwanchi'
Posted : 2014-09-24 17:02
Updated : 2017-10-30 10:04
Park Yoon-bae
Print PreviewPrint Preview
Font Size UpFont Size Up
Font Size DownFont Size Down
  • facebook
  • twitter
  • kakaolink
  • whatsapp
  • reddit
  • mailto
  • link
By Park Yoon-bae
Deputy managing editor


The nation's financial sector has made efforts to improve its competitiveness since the outbreak of the 1997 Asian currency crisis. But such efforts were not successful in turning local banks and other financial companies into global giants.

A total of 168 trillion won of taxpayers' money was injected into the financial sector following the crisis in a desperate bid to bring the shaky banking and financial system back to normal. Early in the 2000s, domestic banks ostensibly appeared to have regained their health with the help of the public funds.

But now, their future is still not bright as they have failed to present a new vision or set out a strategy to keep their growth momentum. We should not be optimistic about any quick fix.

One of the most serious obstacles to the development of the financial industry is "gwanchi," or government control on banks and nonbank financial institutions. Gwanchi has been too deeply-entrenched to be eliminated in the banking sector.

State control has long been blamed for fostering cronyism and corruption among bureaucrats and bankers. It was one of the major causes of the Asian financial woes. It is regrettable that government officials still refuse to ease or lift their control, despite their repeated pledges for deregulatory reform and liberalization.

In other words, policymakers are addicted to gwanchi. They keep trying to tighten their grip on the banking system in an apparent attempt to exercise their influence on finance and economy. They have formed a network of "gwanfia," a combination of bureaucracy and mafia.

Gwanfia can be traced back to "mofia" as far as finance is concerned. Mofia was a portmanteau of mafia and the acronym for the Ministry of Finance (MOF), the old name for the Ministry of Strategy and Finance.

Mofia was widely used in the media in the 1980s and ‘90s, although its use is now eclipsed by gwanfia as seen in the case of the Sewol ferry disaster, the embedded cause of which is attributed to corrupt ties among bureaucrats, regulators and ship owners.

Mofia refers to the network of the elite bureaucrats who take top positions at government agencies, regulatory bodies, banks and other financial companies after their retirement. This network has helped develop crony capitalism in collaboration with owners of chaebol, or family-run conglomerates.

Mofia members are still active in the financial sector regardless of who rules the country ― conservatives or liberals. They have solidified their foothold without being influenced by political transition. They have even lobbied policymakers, politicians and lawmakers to protect the self-interests of banks and financial companies.

One of those members is Lim Young-rok, chairman of KB Financial Group, who has come under mounting criticism for causing an internal feud with the CEO of the group's flagship unit, Kookmin Bank, over the change of its computer system.

Lim, who was a vice finance minister between 2007 and 2008, took the helm of the financial holding company in July last year. He has been at odds with former Kookmin Bank CEO Lee Kun-ho. The feud between Lim and Lee came to a head when the board of directors decided to replace the bank's IBM computer system with a Unix one in April this year. Lee was strongly against the new system.

The dispute led the Financial Services Commission to slap Lim with a three-month suspension for mismanaging the internal dispute with Lee, who resigned early this month after the Financial Supervisory Service upgraded penalties for both of them from "cautionary" to "punitive warnings."

However, Lim has refused to resign voluntarily, defying the disciplinary action. He has also tenaciously resisted the KB Financial board's Sept. 17 agreement to dismiss him for mismanagement, threatening to take his case to court.

The dispute is seen as a power struggle between Lim and Lee. Apparently, Lim will not give up his post in order to wield his power as a member of the mofia as well as gwanfia.

We must learn a lesson from the KB Financial case.

The nation should get rid of government control of the banking and financial sector. Gwanchi has destroyed the market system and blocked fair and free competition, while allowing bureaucrats to flex their muscle and fatten their own pockets.

To do this, the authorities should no longer try to "parachute" retired bureaucrats into banks and other financial companies. Policymakers and politicians have to bear in mind that banks and non-bank institutions can never be a booty or trophy that is available for those who are loyal to the inner circle of political power. They must not repeat their mistake of bringing all the evils to the financial sector in the name of gwanchi.

Emailbyb@ktimes.com Article ListMore articles by this reporter
 
Top 10 Stories
1Korea to ease entry rules to boost tourism, domestic spending Korea to ease entry rules to boost tourism, domestic spending
2Korea moves to shorten COVID-19 isolation period to 5 days Korea moves to shorten COVID-19 isolation period to 5 days
3[INTERVIEW] Can art become stable investment source? INTERVIEWCan art become stable investment source?
4Will dismantling oligopoly result in successful bank industry reform? Will dismantling oligopoly result in successful bank industry reform?
5Generation Z entrepreneurs turn oyster shells into trendy dish soapGeneration Z entrepreneurs turn oyster shells into trendy dish soap
6Celltrion chairman vows to develop new drugs, initiate M&As Celltrion chairman vows to develop new drugs, initiate M&As
7Fintech, lifestyle products can help Korea grow trade ties with Hong Kong: city's trade promotion chief in Korea Fintech, lifestyle products can help Korea grow trade ties with Hong Kong: city's trade promotion chief in Korea
8Terraform Labs co-founder's extradition could be delayed more than 1 month Terraform Labs co-founder's extradition could be delayed more than 1 month
9Ex-journalist to lead NK defector support foundation Ex-journalist to lead NK defector support foundation
10Top envoy to US tapped as new national security advisorTop envoy to US tapped as new national security advisor
Top 5 Entertainment News
1'My ID is Gangnam Beauty' to be adapted into live action series in Thailand 'My ID is Gangnam Beauty' to be adapted into live action series in Thailand
2From IVE to NCT DOJAEJUNG, K-pop hotshots brace for April chart race From IVE to NCT DOJAEJUNG, K-pop hotshots brace for April chart race
3[INTERVIEW] Choi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet' INTERVIEWChoi Min-sik, Lee Dong-hwi on creating Korean-style noir with 'Big Bet'
4Ra Mi-ran, Lee Re to lead fantasy drama 'The Mysterious Candy Store' Ra Mi-ran, Lee Re to lead fantasy drama 'The Mysterious Candy Store'
5[INTERVIEW] Ahn Jae-hong on playing underdog basketball coach in 'Rebound' INTERVIEWAhn Jae-hong on playing underdog basketball coach in 'Rebound'
DARKROOM
  • Turkey-Syria earthquake

    Turkey-Syria earthquake

  • Nepal plane crash

    Nepal plane crash

  • Brazil capital uprising

    Brazil capital uprising

  • Happy New Year 2023

    Happy New Year 2023

  • World Cup 2022 Final - Argentina vs France

    World Cup 2022 Final - Argentina vs France

CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Contact Us
  • Products & Services
  • Subscribe
  • E-paper
  • RSS Service
  • Content Sales
  • Site Map
  • Policy
  • Code of Ethics
  • Ombudsman
  • Privacy Statement
  • Terms of Service
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group