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

    Kim Da-mi, Jeon So-nee team up for coming-of-age film 'Soulmate'

  • 3

    Park Hyung-sik to play crown prince in tvN series 'Our Blooming Youth'

  • 5

    SM to introduce multi-production system to increase business capabilities

  • 7

    Plan to construct new memorial center for ex-president faces backlash

  • 9

    Discussions on raising age for free subway rides gain momentum

  • 11

    'Ant-Man 3' promises bigger, better action with same family dynamic: cast

  • 13

    Able C&C sale attracts dozens of potential buyers

  • 15

    Seoul to discuss reforming free transportation benefits for seniors

  • 17

    Naver 2022 net profit down 96% on one-off factor

  • 19

    Britain's trade with N. Korea more than doubles last year: report

  • 2

    Teens feel peer pressure to buy luxury goods endorsed by K-pop stars

  • 4

    Itaewon tragedy's bereaved families harassed by far-right protesters

  • 6

    Too many emergency text alerts? Gov't to halt daily COVID-19 notifications

  • 8

    First lady expands presence in domestic politics

  • 10

    Ex-justice minister gets 2-year prison term for academic irregularities surrounding family

  • 12

    Apple Pay can be launched in Korea: financial regulator

  • 14

    FSC OKs Apple Pay to be available in Korea

  • 16

    Naver to roll out conversational AI service

  • 18

    Yoon's office to press charges over report on fortune teller

  • 20

    SEMICON Korea defies chip industry downturn

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
Sun, February 5, 2023 | 00:11
Times Forum
Deplorable trust rating for banking industry
Posted : 2018-09-17 17:57
Updated : 2018-09-18 20:36
Print PreviewPrint Preview
Font Size UpFont Size Up
Font Size DownFont Size Down
  • facebook
  • twitter
  • kakaolink
  • whatsapp
  • reddit
  • mailto
  • link

By Dr. Jeffrey I. Kim

Recently Dr. Yoon Suk-heun, governor of the Financial Supervisory Service (FSS), presented striking news at a public meeting.


Governor Yoon disclosed his plans for regulatory reforms and explained the background of his plans. Before he took up his current position, he had become very disappointed that the banking and financial industry lost the public's trust.

Governor Yoon quoted information from an annual report by the Ipsos Mori Social Research Institute in the U.K. The institute assesses which roles are most trusted by the public.

According to the 2017 Veracity Index, not many people trust bankers. Amazingly 94 percent of the public have faith in nurses making them the most trusted professionals. Doctors came next with 91 percent.

Teachers had 87 percent, professors 85 percent, scientists 83 percent, ordinary people in the street 64 percent, while bankers had only 38 percent, government ministers 19 percent and politicians 17 percent.

He also quoted results from a 2015 survey released by the Korea Institute of Finance. The report showed people think banks do not treat customers fairly. Only 6.8 percent of customers believed that banks provided fair and trustable banking services. Also, 69 percent of customers believed the lack of ethics on the part of financial companies was a major cause of public distrust in the banking industry.

Numerous survey results indicate that after the global financial crisis of 2007-2008, people began to lose their confidence and trust in bankers and in the financial industry. Particularly many young millennials who were born between 1981 and 1996 have little faith in the industry.

As of 2017, 56 million millennials were working or looking for work. It would be hard for them to forget the names of banks which were bailed out by taxpayers' money or the tents of the "Occupy Wall Street" movement.

Younger millennials have been pushed into the harsh environment of massive unemployment and hefty student debt. Yet they too often hear of bank CEOs being overpaid. So they feel frustrated and distrustful of such financial institutions.

Korean people have an even stronger distrust in their banking or financial industry. Korea experienced record-breaking massive unemployment after it was struck by the 1997-98 Asian financial crisis. Banking reforms were attempted then but with little success.

The interest rate differentials between banks and nonbanking financial companies have been extremely large. Yet prudential regulation has not been practiced enough. Governor Yoon said the FSS had not provided guidelines for shadow banks in charging borrowers the right interest rate pursuant to their creditworthiness.

In addition, last July the ruling Democratic Party of Korea bitterly criticized that the CEOs of mega banks in Korea have been excessively overpaid. They argued that commercial banks had made large profits simply by maximizing the spread between the lending and borrowing rates.

Korean people have deeply rooted distrust in the appointment of bank CEOs and leaders in the financial industry. The mass media has often covered scandals related to the appointment of unqualified or low-quality personnel to key positions at state-invested banks and other financial companies.

As an example, in April 2016 Bank of Korea (BOK) unionists rallied against four new Monetary Policy Board directors at the central bank, recommended by the government and other agencies, calling them "parachute appointments."

The BOK union members alleged that the new members of the interest rate-setting committee would hurt the central bank's independence from the government and politicians.

Taking powerful positions in the banking industry or other organizations has a lot to do with "rent-seeking." The idea of rent-seeking was developed by Gordon Tullock in 1967 but the expression "rent-seeking" itself was coined by Anne Krueger in 1974.

When the concept of rent-seeking is applied in Korea, it means that by manipulating the social or political environment, rent-seekers attempt to obtain economic rent which is a portion of income in excess of what they are entitled to fairly and squarely. In most cases, rent-seeking in Korea is pursued by using school, provincial or bureaucratic ties.

Koreans' trust in the banking industry is now alarmingly low. The country must do its best to restore public trust in banking services by all means. Otherwise it may face a dire economic disaster caused by another regional or global financial crisis.


Dr. Jeffrey I. Kim (ickim@skku.ac.kr), former foreign investment ombudsman, is a professor emeritus at Sungkyunkwan University. He earned a Ph.D. in economics at the University of Chicago and taught at the University of Colorado, Boulder, and the American University, Washington, D.C.



 
Top 10 Stories
1Teens feel peer pressure to buy luxury goods endorsed by K-pop stars Teens feel peer pressure to buy luxury goods endorsed by K-pop stars
2Itaewon tragedy's bereaved families harassed by far-right protesters Itaewon tragedy's bereaved families harassed by far-right protesters
3Too many emergency text alerts? Gov't to halt daily COVID-19 notifications Too many emergency text alerts? Gov't to halt daily COVID-19 notifications
4Plan to construct new memorial center for ex-president faces backlash Plan to construct new memorial center for ex-president faces backlash
5First lady expands presence in domestic politics First lady expands presence in domestic politics
6Discussions on raising age for free subway rides gain momentum Discussions on raising age for free subway rides gain momentum
7Able C&C sale attracts dozens of potential buyers Able C&C sale attracts dozens of potential buyers
8FSC OKs Apple Pay to be available in Korea FSC OKs Apple Pay to be available in Korea
9Naver to roll out conversational AI service Naver to roll out conversational AI service
10SEMICON Korea defies chip industry downturn SEMICON Korea defies chip industry downturn
Top 5 Entertainment News
1Kim Da-mi, Jeon So-nee team up for coming-of-age film 'Soulmate' Kim Da-mi, Jeon So-nee team up for coming-of-age film 'Soulmate'
2Park Hyung-sik to play crown prince in tvN series 'Our Blooming Youth' Park Hyung-sik to play crown prince in tvN series 'Our Blooming Youth'
3'Ant-Man 3' promises bigger, better action with same family dynamic: cast 'Ant-Man 3' promises bigger, better action with same family dynamic: cast
4[INTERVIEW] Disney+ 'Big Bet' director on portraying greed and desire INTERVIEWDisney+ 'Big Bet' director on portraying greed and desire
5TXT, Le Sserafim top Oricon album and singles chart TXT, Le Sserafim top Oricon album and singles chart
DARKROOM
  • 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

  • World Cup 2022 France vs Morocco

    World Cup 2022 France vs Morocco

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