The South Korean government, financial institutions and academic experts have placed increasing focus on achieving the government's target of making South Korea a financial hub of Northeast Asia by letting financial institutions become competitive in the global markets. However, their efforts, centered on increasing competitiveness of banks, securities and insurance firms, have been criticized for turning a blind eye to the nation’s lending markets for low-income consumers. As banks are shunning low-income consumers because of their poor credit ratings, people are increasingly searching for illegal lenders. Some estimates show about 7 million people were borrowing money from consumer lenders in spite of higher interest rates. To promote markets for small loans, the idea of micro-credit lending is gaining wider acceptance worldwide. However, it’s too early to discuss the micro-credit market in South Korea and the market’s effect hasn’t been verified yet. In addition, since the 1997-98 Asian financial crisis, banks have managed to boost their profitability, resulting in a polarization among financial institutions. Mutual savings banks, which target low-income consumers, are trying to find their role. However, with the high level of regulations for the mutual savings banks, their efforts to increase their own competitiveness haven’t progressed far enough.

So, The Financial News holds the second “Small-Loan Awards and Symposium” to gather public opinion on building a safety net for small-loan markets and provide an opportunity for government officials to reflect these opinion in policies.

▣ Effects

Economists say ordinary people are the starting point of finance.
In order to build a safety net for small-loan markets, this symposium is expected to provide an opportunity for working-level officials and executives for small-loan markets to exchange views, raise public opinion and reflect them into policies.

The symposium is aimed at offering a venue of public debate for small-loan markets with many experts, including the U.S. Federal Reserve Bank director Sheila F. Maith and Waseda University professor Fumihiko Hiruma, attending.

With the Capital Market Consolidation Act coming into force, attention is be focused on how to build a new Capital Market Business System (CMBS). So, the debates will partly center on how small-loan companies will embrace innovative financial services and information technology for customer risk management.

Like last year’s symposium, this year’s event will present awards to people at small-loan financial institutions who have devoted themselves in a goodwill competition.

Furthermore, the event will lay the groundwork for domestic small-loan companies to discuss how they can raise competitiveness by socializing with working-level officials and chief executive officers.