Hana Financial chief says productive finance only complete when paired with inclusive finance

Joint seminar by KIF, KIET and Hana Financial Research Institute

Experts call for shift in policy finance role in era of low growth

"Strategic, selective and concentrated support needed over universal aid"

Ham Young-joo, chairman of Hana Financial Group. [Hana Financial Group]

Ham Young-joo, chairman of Hana Financial Group, said Thursday that "productive finance in the truest sense is only complete when it goes beyond nurturing advanced future industries and combines with inclusive finance — finance that broadly encompasses the foundational industries and the many small and medium-sized manufacturers that form the backbone of our economy."

Ham made the remarks at a seminar held Thursday at the Korea Federation of Banks building in Jung-gu, Seoul, jointly organized by the Korea Institute of Finance, the Korea Institute for Industrial Economics and Trade, and the Hana Financial Research Institute. The seminar was titled "Financial Policy in the Age of Strategic Industrial Policy: Shifting the Policy Paradigm to Secure Future Growth Engines."

Ham said that as global supply chain uncertainty has grown in recent years, industrial policy and financial policy — both directly tied to national security — can no longer be considered separately, and that "the role and responsibility of private finance has become heavier than ever."

He then said finance must break free from the narrow frame of traditional funding support and reinvent itself as "a reliable partner that designs new industrial ecosystems grounded in a deep understanding of industry." Ham pledged that Hana Financial would play a leading role as one pillar of a cooperative model linking industrial policy, policy finance and private finance, helping Korean companies secure future technological competitiveness and ultimately lead the global technology ecosystem.

From left: Kwon Nam-hoon, president of the Korea Institute for Industrial Economics and Trade; Lee Hang-yong, president of the Korea Institute of Finance; Ham Young-joo, chairman of Hana Financial Group; and Jeong Hee-su, director of the Hana Financial Research Institute, pose for a photo at the Financial Policy in the Age of Strategic Industrial Policy seminar held Thursday at the Korea Federation of Banks building in Jung-gu, Seoul. [Kim Eun-hee]

The seminar produced calls for policy finance in the era of low growth to move away from universal support and instead strengthen strategic, selective and concentrated support for areas the private sector finds difficult to pursue on its own.

Koo Jeong-han, head of the Industrial Structure Innovation Finance Research Center at the Korea Institute of Finance, said South Korea has built a system in which policy finance institutions supply funding to small and medium-sized enterprises across different stages of a company's life cycle. He said that because multiple institutions channel funds to similar groups of companies, there is a risk of inefficiency — including well-performing companies accessing policy finance and the possibility of prolonged reliance on such support. He noted that while deploying capital broadly across industries could yield high returns during the high-growth era of the past, that approach is no longer efficient now that overall growth has slowed.

Koo said that under a low-growth trajectory, policy finance needs to play a different role than it did during high-growth periods, and said "nurturing future key industries is the most important task." He explained that major countries are engaged in a race for dominance centered on advanced strategic industries such as AI, and that falling behind in that competition could deal a serious blow to economic security. The United States, Japan, China and Germany are already pursuing large-scale policy support for advanced strategic industries.

Koo said policy finance in the past focused on universal support, company-centered support, parallel support for both corporate growth and survival, small-scale support spread across many recipients, corporate-level restructuring, and after-the-fact restructuring. He said it must now shift toward strategic and selective support, industrial-ecosystem-centered support, support for both corporate and industrial growth, large-scale concentrated support, industrial restructuring, and preemptive restructuring.

He particularly said South Korea "must leverage its strengths while addressing its weaknesses, with a focus on advanced strategic industries," and that for existing key industries in crisis, "the root causes must be accurately diagnosed and preemptive, tailored restructuring pursued."

Kim Nam-hoon, head of the economic and industrial analysis team at the Hana Financial Research Institute, said in a presentation on the direction and role of private finance in promoting productive finance that "industrial structural transformation and securing technological superiority are urgently needed to address the slowdown in growth momentum among key industries and to resolve the widening polarization between companies."

Kim said that unlike the growth seen in the IT sector driven by the semiconductor boom, South Korea's key domestic industries are experiencing a slowdown due to trade pressure and China's technological catch-up. He said that to promote productive finance, the financial sector needs to expand its screening capabilities, upgrade direct financing, and coordinate more closely with policy finance institutions.

Kim also said the sector must "build an assessment framework capable of evaluating technological capability and business viability rather than relying on collateral," and must "expand the role of risk capital — including investment, investment banking and venture finance." He said a risk-sharing model developed through coordination with policy finance institutions must be established.

Jo Jae-han, head of the Industrial Future Policy Center at the Korea Institute for Industrial Economics and Trade, argued that industrial policy support must be expanded and upgraded to respond to structural industrial transformation.

Jo said major countries are strengthening industrial policy to address economic security, supply chain stability, carbon neutrality, digital transformation and competitiveness in advanced industries, and said "South Korea also needs a policy shift to restore industrial competitiveness and expand its growth base."

Jo said South Korea's industrial policy remains characterized by a small-scale, fragmented structure and support centered on export finance and lending, and called for "vertical, targeted industrial policy focused on strategic sectors, along with more sophisticated support tools." He also called for the establishment of a policy evaluation framework that comprehensively considers the effectiveness of industrial policy and fiscal efficiency.

The Korea Institute of Finance and the Korea Institute for Industrial Economics and Trade signed a memorandum of understanding for joint research ahead of the seminar Thursday. The two institutions plan to continue conducting joint research aimed at strengthening the linkage and integration between financial policy and industrial policy.

ehkim@heraldcorp.com