Korea Capital Market Institute

The recently raised argument to allow banks to run in-house discretionary investment management services is problematic because it undermines the foundation of the well-established financial holding company system, and also runs against the global trend. From the microeconomic perspective, this deepens the linkage between the manufacturing and distribution of financial products and imperils investor protection. Another expected demerit is the possibility for cutthroat competition in the discretionary management market and a contraction in the fund market. Hence, this argument is unjustified in terms of long-term prospect of Korea’s asset management industry.