Korean Financial Sector Designs “Creative Finance”

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To build “Creative Economy” is said to be one of the major goals which President Park Geun-hye’s administration is trying to achieve. Creative Economy is to merge different industries together. For example, by integrating science technology and culture, it aims to enhance industrial competitiveness in global market.

“Creative Finance” is one of the measures which support the idea of creative economy. Shin Je-Yoon, the chairman of FSC, defines it as ‘it is collaboration of industries and financial companies based on evaluation of the industries’ technology and know-how.’ In other words, Creative Finance supports to link financial investors to companies which have great ideas yet lacking in funds.

As 2014 is the year of cultivating Creative Finance, there are many governmental and non-governmental parties taking actions. Here, I am going to provide you with 3 examples.

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The first one is the Financial Services Commission of Korea – the Tech Bureau. FSC chairman Shin Je-Yoon had announced that the FSC will found TB (Tech Bureau) by 2015. TB is a system which manages technical know-how within the industry. It is similar to CB (Credit Bureau) which tracks down financial information of individuals and businesses. TB will not only apply know-hows of policy engines such as Technology Guaranteed Fund, but also serve a role as virtuous infrastructure of technical evaluation.

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Secondly, the Korea Securities Depository plans to expand support services. Yoo Jae Hoon said that “We are going to develop a value-added service which will support capital market’s sufficiency and safety. It will surpass the ability of traditional securities deposit services.” The main scheme is to facilitate crowd-funding financing along with Securities Lending and Borrowing. Crowd-funding will allow company founders raise business fund from small investors through the internet. It is expected to have great impacts on enabling more individuals to take parts in investments. Furthermore, other services such as Fund-net or Pension Clear will be designed.

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Kwon Seon-joo, the CEO of Industrial Bank of Korea, especially shows IBK’s enthusiasm to the idea of Creative Finance. She said that “IBK is going to create an exemplary model of creative finance” on February 12th, 2014. One project is to make 78 billion won (72 million USD) investment on small and middle-sized companies through Security Deposits on intellectual property, and additional 200 billion won will be used to loan intellectual property of individuals. It is expected to have multiplier effects about 16.4 trillion won (15 billion USD) on the new industry field, especially small and venture companies, and R&D companies.

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There are many policies and projects going on in Korea in order to support creative finance. Those above examples are merely corner stones; they would have great ripple impacts on Korean Finance. As read above, most of the policies of creative finance aim to integrate small and medium-sized companies and those individuals with great entrepreneur ideas. More and more people will be benefited from Korea’s move towards creative finance.

Seongmin (Rose) Kim

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