"Productive Finance Hinges on Innovative Companies and Long-Term Investments"

Direction Matters More Than Injecting Funds

Improvements Needed in Weak Corporate Governance and Shareholder Returns

Corporate Initiatives and Legal/Institutional Reforms Must Go Hand in Hand

There are growing voices stating that the success of productive finance hinges on innovative companies and long-term investments.

Need for Restructuring Household Assets. Korea Capital Market Institute

Han Jaejun, Professor of Finance and Business Administration at Inha University, stated at the seminar on the achievements and outlook of capital market reform held at the Yeouido Financial Investment Center on May 22, "The challenge for productive finance is not simply to inject more money, but to ensure that funds flow beyond real estate and collateralized loans to innovative companies and long-term investments."

Professor Han added, "The productive finance policies promoted by the Lee Jaemyung administration require banks to expand lending to the real sector, but ultimately, the capital market must complete the process by pricing investment risks, sharing losses, and supplying long-term funds to growth companies."

Park Changkyun, Senior Research Fellow at the Korea Capital Market Institute, said, "Around April 2025, we are observing the possibility of structural changes in the KOSPI. This is interpreted not only as a result of a global bull market but also as a reflection of significant effects from domestic system reforms." He added, "The Korean stock market has suffered from long-standing undervaluation, with insufficient shareholder returns, low profitability, and weak corporate governance cited as the main causes."

Research Fellow Park pointed out, "Household assets are excessively concentrated in real estate and cash or deposits, while the burden of household debt and mortgage loans is extremely high." He continued, "Capital market reform is needed not simply to boost the stock market, but to shift the structure of household assets toward financial investment products and to broaden the funding base for companies."

He also stated, "Capital market reform is being pursued in two directions: encouraging voluntary corporate efforts and imposing discipline through legislative and institutional improvements. Additional tasks are important, such as strengthening the substance of director responsibility, enhancing the price discovery function and protection of minority shareholders, and alleviating tax imbalances between financial products and real estate, so that funds can move toward productive financial investments."

This seminar was co-hosted by the Korea Capital Market Institute, the Seoul Institute for Social and Economic Research, and the Korean Society for Economic Development, and was organized to discuss the background and significance of recent capital market reforms in depth.

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