Introduction > Chronology of the Korean Financial Industry

The 1950s~1960s (Development Finance)

Major Policies

Major Policies
1948 ~ 1959	1960 ~ 1964	1965~ 1969
The government of Republic of Korea and the Ministry of Finance created (1948) The Bank of Korea established (50) Currency reform (100 won → 1 whan ) (53) Acceded to IMF, IBRD (55) Daehan Exchange opened (56)	The Economic Planning Board (EPB) established (61) The government-led 5-year Economic Development Plan set up (62) Currency reform (10 hwan → 1 won) (62) Daehan Exchange → Korea Exchange (63) The 3rd Republic launched (63)	Single floating exchange regime installed (65) Interest rate normalization policy implemented (65) ADB created Acceded to ADB (66) Advanced into GATT (67) First foreign bank branch opened (67)

Financial Decree

Financial Decree
1948 ~ 1959	1960 ~ 1964	1965 ~ 1969
Government Organization Act (48), The Bank of Korea Act, The Banking Act (50) Korea Development Bank Act (53), National Agricultural Cooperative Federation Act (57)	Trust Business Act, Kookmin Bank Act (61) Insurance Business Act, Securities& Exchange Act (62)	Single floating exchange regime installed (65) Interest rate normalization policy implemented (65) ADB created Acceded to ADB (66) Advanced into GATT (67) First foreign bank branch opened (67)

Financial Services Industry

Financial Services Industry
	1948 ~ 1959	1960 ~ 1969
Bank	4 banks: Choheung (1897), Commercial (1899), Korea First (1929), Heungeup (1932) 1 regional bank: Seoul Bank (58) Specialized bank: Korea Development Bank (54), Agriculture Bank (56)	6 commercial banks: Heungeup → Hanil (60), Seoul Bank (62), Trust Bank (68) 7 regional banks: Daegu, Busan (67), Choongcheong, Gwangju (68), Jeju, Incheon, Jeonbuk (69) Specialized banks: National Agricultural Cooperative Federation (NACF), Industrial Bank of Korea (61), Kookmin Bank, National Federation of Fisheries Cooperatives (NFFC) (62), Korea Exchange Bank (67), Housing & Commercial Bank (69)
Securities	47 securities companies: Daehan (49), Korea (52), Youngnam (53)	28 securities houses: The number of securities companies reduced due to the shock in the securities market in 1962.
Insurance	9 life insurers: Choseon (21), Daehan (46), Korea (47) 13 non-life insurers: Dongyang (22), New Dong-a (46), Dongbang (52)	6 life insurers: Choseon liquidated, Korea (Korea+Dong-a) (62), Hyupdong liquidated (64) 14 Non-life insurers: Dongbu, Dongkuk, Haedong, Hyundai, Dongbang etc.
Non-banking institutions		18,039 NACFs / NFFCs /National Federation of Forest Industry (NFFI)?The Korea Post initiated financial business (61)
Relevant organizations	Choseon Non-Life Insurance Association (46) → Daehan Non-Life Insurance Association (48) Choseon Life Insurance Association (50) → Daehan Life Insurance Association (58) Korea United Securities Finance Corporation (55), Daehan Securities Dealers Association (53)	Daehan Life Insurance Association (58) → Korea Life Insurance Association (60) Korea United Securities Finance Corporation (55) → Korea Securities Finance Corporation (62), Adjustment Corporation (62) National Credit Union Federation of Korea (64), Korea Investment Corporation (68), Korea Export Insurance Corporation (69)

MAJOR ECONOMIC INDICATORS

The 1970s (Policy Finance)

Major Policies

Major Policies
1970 ~ 1974	1975 ~ 1979
The Korea-Busan highway opened (428km) (70) 8.3 Emergency Action. Brought the underground economy into the institutional economy (72) The 4th Republic launched (72) The promotion plan for heavy and chemical industry announced (73) 1st oil shock ($2.99 → $11.59) (73)	Economic boom benefiting from high demand in the Middle East (76～78) The value added tax system introduced, The volume of export reached $10 billion (77) Yoido Exchange opened (78) The transaction volume in the securities market exceeded the mark of ￦1 trillion (78) 2nd oil shock ($13.66 → $27.88) (79)

Financial Decree

Financial Decree
1970 ~ 1974	1975 ~ 1979
Act on Mutual Savings & Finance Companies, Act on Credit Unions (72) Act on Short-Term Finance (72), Act on Credit Guarantee Fund (74)	Act on Merchant Banking Corporations (75) Act on Long-Term Credit Bank (79)

Financial Services Industry

Financial Services Industry
	1970 ~ 1979
Bank	5 commercial banks: Choheung, Commercial, Korea First, Hanil, Seoul Trust Bank (76) 10 regional banks Kyongnam (70), Choongnam (71), Incheon → Kyonggi (72) The Export-Import Bank of Korea (KEXIM) established (76)
Securities	27 securities companies 2 investment trust companies: Korea Investment Trust (74), Daehan Investment Trust (77)
Insurance	6 life insurers: Korea Life Insurance liquidated, Donghae Life Insurance established (73) 15 non-life insurers → Due to the limit on the establishment of insurance companies, there was no change in the non-life insurance industry until the late 1980s.
Non-banking institutions	10 investment financial companies (72), 6 merchant banks (76) 211 mutual savings & finance companies, 491 credit unions, 1,615 NACFs, NFFCs, NFFIs: As of 1975
Relevant organizations	Korea Fire & Marine Insurance Association (73), Association of Mutual Savings & Finance Companies (73) → Federation of Mutual Savings & Finance Companies (75) New Community Finance Association (73), Bank Association (74), Korea Securities Depository (74), Credit Guarantee Fund (76) Securities Supervisory Board (77), Korea Securities Computerization (77), Korea Insurance Corporation (78)

MAJOR ECONOMIC INDICATORS

The 1980s (Financial Liberalization)

Major Policies

Major Policies
1980 ~ 1984	1985 ~ 1989
The floating exchange regime based on currency basket introduced (80) A plan for commercial bank management liberalization announced (80) → Commercial banks went through privatization (81 83) The 5th Republic launched (81) The calculation method of stock price index changed (83) Crisis from foreign debt (The total foreign debt amounted to $46.7 billion, The ratio of total foreign debt to GDP stood at 49.6%) (80 85)	Economic boom based on the 3 lows (low oil prices, low interest rates, low exchange rates) (86～89) The number of investment trust, life insurance, lease and card companies surged (87~90) The 6th Republic launched (88) KOSPI surpassed the mark of 1,000 points (Apr, 89) The Stock Market Stabilization Policy devised (Dec 12, 89)

Financial Decree

Financial Decree
1980 ~ 1984	1985 ~ 1989
Monopoly Regulation & Fair Trade Act (80) → Financial businesses became subject to the act Act on Real Name Financial Transactions & Guarantee of Secrecy (82)	Act on Financial Support for New Technologies (86) Credit Card Business Act (87) → Abolished (97)

Financial Services Industry

Financial Services Industry
	1980 ~ 1989
Bank	11 commercial banks: Shinhan (82), Koram (83), Dongwha, Dongnam, Daedong, Korea Exchange (89) → Initiated credit card business (82) and trust service (84) 10 regional banks: Daegu, Busan, Choongcheong, Gwangju, Jeju, Kyeonggi, Jeonbuk, Gangwon, Kyeongnam, Choongbuk → Offered trust service (83) Korea Long-Term Credit Bank established (80), Korea Exchange Bank transformed from a specialized bank to a commercial bank (89)
Securities	25 securities companies 3 investment trust companies: Korea Investment Trust, Daehan Investment Trust, Kookmin Investment Trust (82)	25 securities companies 8 investment trust companies: 5 regional investment companies established (89)
Insurance	6 life insurers: Daehan, Heungkuk, Jeil, Dongbang, Kyobo, Dong-a 14 non-life insurers	25 life insurers: Foreign life insurers entered the Korean market. Regional life insurance companies set up. 14 non-life insurers
Non-banking institutions	32 investment finance companies, 6 merchant banks 8 lease companies 237 mutual savings & finance companies: 8incorporated (82) 1,207 credit unions	18 lease companies: 10 incorporated (89) 1,286 credit unions 5 card companies: 3 incorporated (87), 2 incorporated (88) 32 investment finance companies, 6 merchant banks
Relevant organizations	Non-Life Insurance Rate Assessment Committee (83) → Korea Insurance Development Institute (89), Credit Management Fund (83), Bank Association (74) → Korea Federation of Banks (84) Korea Financial Telecommunications & Clearings Institute (86), Korea Technology Credit Guarantee Fund (89), Korea Insurance Corporation (78) → Insurance Supervisory Board (89) National Credit Union Association of Korea (64) → National Credit Union Federation of Korea (89)

MAJOR ECONOMIC INDICATORS

The 1990s (Financial Liberalization)

Major Policies

Major Policies
1990 ~ 1992	1993 ~ 1995	1996 ~ 1997	1998 ~ 1999
The market average exchange rate regime introduced (90) The four-phase plan for interest rate liberalization announced (91) The securities market became open to foreign investors. → Foreign investors were allowed to invest in the Korean stock market (92) The plan for first-phase interest rate liberalization and openness announced (92) Foreign securities company opened Korea's first foreign branch (92)	The Civilian Government launched (93) The Financial Reform under the 5-Year Economic Development Plan (93) The Real Name Financial Transaction Policy fully introduced (93) (MOF+EPB) → Ministry of Finance & Economy (94) WTO launched (95)	KOSDAQ market opened (96) Admitted to the OECD (96) The deposit protection policy implemented (97) Applied for IMF bail-out package (97) The free floating exchange rate regime introduced (97)	People's government launched (98) Chairman of Monetary Policy Committee: Minister of MOF → Governor of the Bank of Korea (98) Financial Supervisory Commission (98) and Financial Supervisory Service established (99) 1st phase of banking restructuring (98) MOF → Ministry of Finance & Economy (MOFE) (98) Korea Futures Exchange opened (99)

Financial Decree

Financial Decree
1990 ~ 1992	1993 ~ 1995	1996 ~ 1997	1998 ~ 1999
Act on Merger & Transformation of Financial Institutions (91) → Act on the Structural Improvement of the Financial Industry (97)	Use & Protection of Credit Information Act Depositor Protection Act, Futures Trading Act (95)	Act on the Establishment, etc of Financial Supervisory Organizations (97) Act on Real Name Financial Transactions & Guarantee of Secrecy (97) 6th amendment of the Bank of Korea (97)	Foreign Investment Promotion Act (98), Foreign Exchange Transactions Act (99) Asset-Backed Securities Act, Framework Act on Electronic Commerce (99)

Financial Services Industry

Financial Services Industry
	1990 ~ 1995	1996 ~ 1997	1998 ~ 1999
Bank	15 commercial banks: Hana, Boram (91), Peace (92), Kookmin (95) 10 regional banks: Same as above Kookmin Bank transformed from a specialized bank to a commercial bank (95)	16 commercial banks: Commercial & Housing Bank (97) 10 regional banks: Same as above Housing & Commercial Bank became a commercial bank (97)	11 commercial banks: 3 liquidated. Hanvit (Commercial+Hanil) Hana (Hana+Boram) (98) 6 regional banks: 2 liquidated, (Choongbuk+Gangwon) → Choheung
Securities	47 securities companies (including foreign securities houses): 5 investment financial companies switched into securities companies (91) 8 investment trust companies: Korea Investment Trust, Daehan Investment Trust, Kookmin Investment Trust, regional investment trust companies (Hanil, Joongang, Hannam, Dongyang, Jeil)	36 securities companies → entered into trust business 24 investment trust companies	32 securities companies: 2 incorporated, 6 liquidated 31 investment trust companies: 13 incorporated, 5 liquidated, 1 merged.
Insurance	33 life insurers: 2 foreign, 1 nationwide , 5 regional life insurance companies incorporated. Domestic life insurers advanced into the overseas market. → 12 overseas offices. 17 non-life insurers : The policy to liberalize prices of insurance products promoted liberalization of the insurance market (93)		29 life insurers: 4 (International, BYC, Taeyang, Korea) liquidated. 17 non-life insurers: Korea+Daehan Guarantee, 1 incorporated (99)
Non-banking institutions	24 investment financial companies: 8 investment financial companies → changed into 2 commercial banks (Hana, Boram) and 5 securities companies.	30 merchant banks: Investment trust companies transformed into merchant banks in accordance with amendment on the Act on Merchant Banks (95) 231 mutual savings & finance companies 7 credit card companies: 2 incorporated (95) 1,666 credit unions	14 merchant banks: 16 liquidated. 1,442 credit unions 186 mutual savings & finance companies: 45 liquidated (12 merged.)
Relevant organizations	Korea Institute of Finance (91), Deahan Securities Dealers Association (53) → Korea Securities Dealers Association (92) Deposit Insurance Corporation (96), Association of Investment Trust (96) → Asset Management Association of Korea (04), Korea Futures Association (97)		Credit Finance Association (98) National Federation of Mutual Savings & Finance Companies (75) → Federation of Mutual Savings & Finance Companies (98)

MAJOR ECONOMIC INDICATORS

The 2000s (Comprehensive Financial Service)

Major Policies

Major Policies
2000 ~ 2001	2002 ~ 2003	2004 ~ 2005
Early payment to IMF bailout package (00) 2nd phase of banking restructuring (00) Korea Investment Trust and Daehan Investment Trust transformed into securities houses (00) Woori Financial Group and Shinhan Financial Group established (01) The Sept 11 terrorist attack occurred; Stock prices plummeted (01)	The Fair Disclosure system introduced and implemented (02) The Participatory Government launched (03) SK Global embroiled in accounting fraud. Some credit card companies went insolvent (03) Bancassurance introduced (03) The government announced the initiative to transform the nation into the financial hub of Northeast Asia (03)	The Korea-Chile FTA took effect (04) Korea Exchange opened (05) The class action suit system regarding securities partly implemented (05) Korea Investment Holdings, Hana Financial Group (05) The New Basel Accord announced (05) KOSPI surpassed the mark of 1,300 points (05.12)

Financial Decree

Financial Decree
2000 ~ 2001	2002 ~ 2003	2004 ~ 2005
Corporate Restructuring Investment Companies Act, Financial Holding Companies Act (00) Special Act on Public Fund Management (00), Corporate Restructuring Promotion Act (01)	Act on Business of Operating Indirect Investment and Assets (03), Implemented (04) Korea Housing Finance Cooperation Act (03)	Act on Class Action Suit Relating to Securities (04) The Korea Exchange Act (04)

Financial Services Industry

Financial Services Industry
	2000 ~ 2001	2002 ~ 2003	2004 ~ 2005
Bank	9 commercial banks: Kookmin (Housing & Commercial + Kookmin) (01) Hanvit (Hanvit + Peace Bank of Korea) (01) 6 regional banks, 5 specialized banks	8 commercial banks : Hana (Seoul + Hana) (02) Hanvit → Woori (02), Shinhan (Shinhan + Choheung) (03) 6 regional banks, 5 specialized banks	8 commercial banks: Woori, Shinhan, Choheung, Kookmin Hana, Korea Exchange , SC First Bank, Koram → Korea Citi (04) 6 regional banks: Daegu, Busan, Gwangju, Jeju, Jeonbuk, Kyeongnam 5 specialized banks: Korea Development Bank, Industrial Bank of Korea, KEXIM, NACF, NFFC
Securities	45 securities companies: 14 incorporated, 1 merged, 42 investment trust companies: 12 incorporated, 1 liquidated.	44 securities companies: 2 incorporated, 1 liquidated, 2 merged 45 investment trust companies: 3 incorporated	39 securities companies: 1 liquidated, 4 merged. 46 asset management companies: 5 incorporated, 4 merged
Insurance	22 life insurers: 1 incorporated, 8 liquidated. 22 non-life insurers: 7 incorporated, 2 liquidated (withdrawal)	23 life insurers: 2 incorporated, 1 liquidated (03) 27 non-life insurers: 6 incorporated, 1 liquidated (02)	22 life insurers: 1 incorporated, 2 liquidated (1 withdrawn) 28 non-life insurers: 2 incorporated, 1 liquidated (withdrawal)
Non-banking institutions	3 merchant banks: 6 liquidated, 6 merged, 1 incorporated 121 mutual savings banks 9 credit card companies 1,268 credit unions	2 merchant banks: Woori Bank + Woori Merchant Bank (03) 114 mutual savings banks 6 credit card companies 1,086 credit unions	2 merchant banks: Korea French Banking Corporation, Kumho Investment Bank 111 mutual savings banks 1,051 credit unions
Relevant organizations	Credit Information Association (00) Adjustment Corporation (63) → Korea Asset Management Corporation (00)	Federation of Mutual Savings & Finance Companies (98) → Korea Federation of Savings Banks (02)	Asset Management Association of Korea (04), Korea Housing Finance Corporation (04) Korea Exchange (05) Korea Securities Computerization (77) → KOSCOM (05)

1)	KOSPI : Before 1972, the average adjusted price was used (1963=100)After 1972 1974, the composite stock price index was applied (1972 1974: Jan 4 1972=100, After 1975: Jan 4 1980.=100)
2)	Exchange rate : The exchange rate of won against dollar (all-year round) was used, but before 1963, official exchange rate was applied (based on the end of the year).

3)	Economic growth : Real GDP growth
4)	Corporate bond yield: Annual average, yield of OTC transaction (3-year bond)
5)	Deposit interest rate: Between 1950 and 1995, interest rate for over 1-year time deposit was used, while after 1996, bank's annual weighted average deposit interest rate was applied.

6)	Financial Interrelations Ratio : Total financial asset ÷ nominal GNI
7)	1st cycle ~ 8th cycle : Economic cycle (data from the National Statistical Office)

*2005
•	KOSPI, exchange rate : as of Dec 16
•	Corporate bond yields, interest deposit interest rates: as of the late Oct 10


•	Real GDP growth rate, nominal GNI per capita: based on estimated figures
•	Financial Inter-relations Ratio, total financial asset : as of the late Sept

MAJOR ECONOMIC INDICATORS