서강대학교

초록/요약

Foreign securities firms have increased their influence on domestic securities firms with greater effects by taking over unhealthy domestic securities firms since 1997 financial crisis, whereas foreign securities firms in the form of simple local branch made inroad into domestic securities market with relatively negligible influence before financial crisis. Therefore, this study has reviewed the effects caused by foreign securities firms’ entry on main business indicators and sector-specific business performance of domestic securities firms using panel data of domestic securities firms from the fiscal years of 2001 to 2005. Fixed effect model is used as an estimation method. As for the effects of foreign securities firms’ entry on main business indicators of domestic securities firms, it is found that profitability of domestic securities firms decreased, stability increased, and cost efficiency increased as well. This implies that the foreign securities firms’ entry triggered the competition between the securities firms, resulting in erosion of brokerage business market by foreign securities firms, which was the main source of income for domestic securities firms. This caused the negative effects on domestic securities firms’ profit, and the conservative business approaches of foreign securities firms stimulated the domestic securities firms to increase stability, and increased competition led to improve cost efficiency higher with the reduction of general and administration expenses of the domestic securities firms. As for the effects on the business performance by sectors, firstly, foreign securities firms’ entry decreased domestic securities firms’ total brokerage business ratio, which is defined by the ratio of total brokerage commission over total operating income. This was because the aggressive business approach by foreign securities firms allowed them to erode the domestic securities firms’ stock brokerage business market, which led to the decrease in brokerage commission income of domestic securities firms. Secondly, foreign securities firms’ entry did not affected the underwriting business of domestic securities firms. This was because securities business was conducted mostly by domestic securities firms focusing on brokerage businesses. Thirdly, the initial hypothesis of this study claiming that foreign securities firms’ entry would increase the proprietary derivative trading business could not be confirmed by the data or methodology used in this study, which was left for future study. Lastly, it is found that foreign securities firms’ entry led to the increase in other commission ratio for the domestic securities firms. Other commission ratio is defined by the ratio of other commission income over the total operating income. This was because the domestic securities firms increased the other commission income to diversify income source to compensate for the revenue erosion of stock brokerage commissions caused by the foreign securities firms’ entry. According to the analytical results of this study, foreign securities firms’ entry worsened the profitability of domestic securities firms, but the cost efficiency of domestic securities firms in a certain sector was greater than that of foreign securities firms and it was constantly increasing, which leads to the possibility of improved profitability in the long run. Stability was also constantly increasing, which leads to the anticipation that the domestic securities firms’ profitability and stability will both increase in the long run. Furthermore, the diversification of the income source for domestic securities firms would be an ideal phenomenon as the domestic securities are shifting their strategy moving toward the advanced investment banks in relation to the 2008 capital market integration act, which is supposed to be ratified by the national assembly in 2007. The data used in this study are from the Financial Supervisory Service, which leaves for the missing data that was not reported to the Financial Supervisory Service. This is the limitation that this study holds. As the hypothesis of this study that foreign securities firms influenced domestic securities firms to increase proprietary derivatives trading business was not confirmed, another solvable approach to this question must be made as a research assignment for the future. As this study is based upon financial statement analysis, another research approach would be that stock market data could be utilized to test the hypothesis, which is a reflection of business performance.