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http://dx.doi.org/10.7737/KMSR.2012.29.3.023

The Effect of Capital Market Consolidation Act on the Efficiency of the Korean Financial Industry  

Kang, Soo-Min (서강대학교 경영전문대학원)
Min, Jae H. (서강대학교 경영전문대학원)
Publication Information
Korean Management Science Review / v.29, no.3, 2012 , pp. 23-43 More about this Journal
Abstract
Enacted for enhancing the competitiveness of the Korean capital market and financial industry, Capital Market Consolidation Act (CMCA) was intended to induce considerable changes such as adopting the concept of financial investment products, regulating financial investment functionally, extending financial investors' business areas and intensifying protection for investors. Employing DEA (Data Envelopment Analysis), this study measures and compares the efficiencies of domestic financial companies between the before and after the enactment of the Consolidation Act. We categorize the financial companies into 4 groups (banks, life insurance companies, property and casualty insurance companies and securities companies) depending on their business types, and evaluate how much and in which direction the Consolidation Act affects the efficiency of each group respectively. The study shows that there is no significant difference between the average efficiency of banks and that of property and casualty insurance companies due to the trade-off between opportunities and threats of the Act. To the contrary, it shows that the respective average efficiencies of life insurance companies and securities companies moved in the opposite directions to a considerable extent. Through empirical tests, we demonstrate the effect of the Act on the efficiency of Korean financial companies, and suggest the countermeasures for each financial group against the Act.
Keywords
Capital Market Consolidation Act(CMCA); Data Envelopment Analysis(DEA); Efficiency;
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Times Cited By KSCI : 1  (Citation Analysis)
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