The Efficiency of Financial Holding Companies in Korea

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This study uses data envelopment analysis to examine whether the government-driven policy of promoting the creation of financial holding companies enhances the productive efficiency of the Korean financial system. We find that financial holding company affiliation has no substantial effects on commercial banks, life insurance companies, and securities companies, regardless of whether or not the financial holding company is owned by the government. However, we find a positive association between the asset diversification of financial holding companies and the productive efficiencies of their affiliated commercial banks, indicating a possibility that financial holding companies can improve efficiency with increased diversification. Our results suggest that the Korean government's policy of promoting the creation of financial holding companies should be reconsidered.
Publisher
KOREAN ECONOMIC ASSOCIATION
Issue Date
2020-01
Language
English
Article Type
Article
Citation

KOREAN ECONOMIC REVIEW, v.36, no.1, pp.29 - 58

ISSN
0254-3737
URI
http://hdl.handle.net/10203/271590
Appears in Collection
MT-Journal Papers(저널논문)
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