Research On The Market Structure And Performance Of Korea Banking Industry

The core content of Industrial organization theory is the relationship of the market structure and market performance. "Market Structure-Market Conduct-Market Performance, SCP" paradigm is the ken content of industrial organization theory, which always focuses on the research of market structure. By studying the situation and the relationship of market structure and performance, we can adjust market structure to achieve the goal of improving market performance.Financial stability lies in the stability of the banking industry, which is a fundamental conclusion drawn from the research of finance in the 20th century. If bank-operating goes wrong even a little, it will result to the entire collapse of banking and credit system, and the financial crisis will be likely to follow. And a growing concern has been focused on the security of the banking system accordingly. People have started to attach more importance to the impact of the market structure of banking industry on the financial stability. SO the stability of the banking industry is more important to sustain financial stability. To cover the shortages of the banking market structure can effectively prevent the impacts of financial crisis and other economic exposures.After the Asian financial crisis of 1997, the Korean government vigorously promoted financial and economical reforms in the countries and regions that were affected by the crisis. The Korean government was well deal with the crisis by the financial theoretic according with finance development. So the Korea was the first country that escaped the influence of the crisis, In the process of financial structure adjusting, banking industry carried on a series of restructuring and development so much integration to increase market power. The Korean government adapted law the institutional framework and improved the financial system to enhance their profitability and the service efficiency. By analyzing the changes in market structure after the Asian financial crisis and the relationship between market structure and market performance, we can draw some conclusions to the banking industrial reform.The thesis begins with current research in market structure of Korean banking industry. First of all, through the empirical analysis of market structure, banking market in Korean is a competitive market which has a high level of concentration and competition. Then, the market performance of Korean banking industry is measured by several factors, such as return on assets, return on equity, net income, net interest margin, capital adequacy, and bad loans ration. During the analysis of the Korean banking market performance, we find that its performance improve largely. Finally, Based on the former two parts, this thesis discusses the relationship between market structure and market performance of Korean banking industry, measures the market structure by using data from 2000 to 2008, and finds that there is a obvious statistical relationship. By changing Korean banking market structure, Korean banking improved their ability in risk control and in profit making. Consequently, the market performance became better.