hankyoreh

The financial district of Seoul’s Yeouido neighborhood

South Korea’s “financial development” level was ranked sixth in the world in a recent survey - but 87th in another assessment last year. The discrepancy is now triggering a debate over which is closer to the truth.

The Bank of Korea (BOK) announced on Mar. 17 that South Korea placed sixth out of 183 countries in an International Monetary Fund (IMF) calculation based on a newly developed financial development index. Using 2013 data, the IMF rated financial institutions and markets - including banks, stock markets, and bond markets - according to their depth, accessibility, and efficiency. South Korea’s rating was calculated at 0.854, near the top of the list and above the 0.718 average for advanced economies.

South Korea placed a comparatively low 28th on the financial institution accessibility index, which assigns ratings according to the market capitalization rate for the ten highest ranking companies and the number of institutions issuing bonds. But it was rated first in the world for financial market efficiency, as calculated according to stock market ratio. The top five countries were Switzerland, Australia, the UK, the US, and Spain.

The rating was also very different from the national competitiveness index issued last year by the World Economic Forum (WEF), which rated South Korea 87th out of 140 countries for financial market development - after Bhutan, which came in 86th. While some differences in findings are to be expected when different institutions conduct international comparisons using different methods, it is rare for assessments to be so disparate that a country is rated 87th one year and sixth the next.

According to the BOK, the difference stemmed from the IMF using a wide range of objective indicators in its assessment, including total loans, number of bank branches, and rates of return. In contrast, the WEF based its assessment on subjective survey results, it explained.

“There is a possibility that the IMF assessment overstated things, since it was based on simple indicators that can be obtained for all countries,” said a BOK official.

The same official also said the low score on the WEF assessment “may have been affected by the high expectations of the businesspeople answering the survey.”

The two assessments were seen as being divided on whether to focus on outward aspects of financial markets or user satisfaction with them.

By Lee Bon-young, staff reporter

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