초록 close

Fighting against Financial Corruption in the perspective of Law and Economics * Research Fellow, Korea Institute of Finance. Kim, Dong-Hwan* Financial corruption in financial institutions and supervisory authorities may occur from a lack of morality or a code of conduct. A lot of unnecessary regulations, absence/lack/forbearance of necessary regulations, and various unfair transactions that exploit the asymmetries of information and bargaining power etc. may incite financial corruption in the private and public sector. Some fundamental defaults in the social, political and economic system may be another important cause of corruption, considering that, in reality, the world as an organic body composed of society, politics, and economy is connected by finance. Fighting against financial corruption starts from analyzing the corruptive connection between agents(including financial institutions and supervisory authorities) and clients. As such, we should design an incentive compatible mechanism that prevents the honest from being selected adversely and the dishonest from creating moral hazards. Abnormal rent-seeking activities by agents should be re-regulated by competition policy and anti unfair & suspicious transaction policy. The penalty system should be diversified and differentiated according to the principal, method, and type of financial corruption. In particular, an administrative or civil penalty rather than a criminal one should be imposed on corruptive activities that undermine the discipline of the financial market. In conjunction, the penalty should be severe enough to have prohibitive effects, which can help exterminate future financial corruptions, and finance anti-corruption infrastructure, such as financial information sharing system, etc. Most importantly, however, a true and strong will must accompany that reforms our social, political and economic system stained by bribery and nepotism.


Fighting against Financial Corruption in the perspective of Law and Economics * Research Fellow, Korea Institute of Finance. Kim, Dong-Hwan* Financial corruption in financial institutions and supervisory authorities may occur from a lack of morality or a code of conduct. A lot of unnecessary regulations, absence/lack/forbearance of necessary regulations, and various unfair transactions that exploit the asymmetries of information and bargaining power etc. may incite financial corruption in the private and public sector. Some fundamental defaults in the social, political and economic system may be another important cause of corruption, considering that, in reality, the world as an organic body composed of society, politics, and economy is connected by finance. Fighting against financial corruption starts from analyzing the corruptive connection between agents(including financial institutions and supervisory authorities) and clients. As such, we should design an incentive compatible mechanism that prevents the honest from being selected adversely and the dishonest from creating moral hazards. Abnormal rent-seeking activities by agents should be re-regulated by competition policy and anti unfair & suspicious transaction policy. The penalty system should be diversified and differentiated according to the principal, method, and type of financial corruption. In particular, an administrative or civil penalty rather than a criminal one should be imposed on corruptive activities that undermine the discipline of the financial market. In conjunction, the penalty should be severe enough to have prohibitive effects, which can help exterminate future financial corruptions, and finance anti-corruption infrastructure, such as financial information sharing system, etc. Most importantly, however, a true and strong will must accompany that reforms our social, political and economic system stained by bribery and nepotism.