서강대학교

초록/요약 도움말

The Korean fund industry is one of the largest and fastest-growing emerging markets in the world. However, since this industry’s market structure is still immature, currently involves oligopolistic distribution channels and distributors’ highly concentrated sales in the affiliated funds, it may lead to conflicts of interest between fund distribution companies and their customers, because distribution professionals and their affiliated companies have an incentive to prioritize their profits over investors. This tendency acts as an entry barrier for small and independent asset management companies and fund distributors, leading to a lack of market competition, which further hampers the growth of the fund industry and thus should be addressed. First, this study verifies that competition in the Korean equity fund industry has intensified after the enforcement of pro-competitive policies, through the first two moments (mean and variance) of distribution fees and market shares (the price perspective). However, the results indicate that the policy effects are impeded by vertical relations among financial companies. Therefore, along with horizontal anti-competitive behaviors, fund distributors’ excessive sales concentration in the affiliated funds needs to be controlled to heighten the policy effects under oligopolistic market structures. Next, this study examines whether fund distributors provide better performing funds to investors in return for distribution fees, and whether market dominant companies outperform the others (the performance perspective). Uninformed investors preferentially select distribution companies to purchase funds that suit their investment objectives, as they cannot evaluate each product themselves. Thus, their performance depends significantly on the quality of their chosen fund distributors’ product portfolios. If fund distributors do not provide better performing products to their customers, a severe investor protection problem occurs in the Korean equity fund industry. This paper differs from previous studies by applying firm-level in addition to fund-level analyses by calculating the equal- and sales-weighted averages of the funds sold by each distribution company for all performance measures. The results demonstrate that fund distributors do not generate positive abnormal returns against the market; moreover, distributors with superior market power are inferior except in market timing abilities. These results of this study imply that measures should be implemented to lower the entry barriers for fund distributors with inferior market power but superior investment capabilities. Doing so would strengthen investor protection and promote the growth of the fund industry in an emerging financial market. Finally, this study analyzes whether fund flows from each distribution channel indicate different responses to the determinants of investment decisions and whether this distinction is caused by a fund distributor’s transaction specific variables (the demand perspective). The investment decision depends significantly on their fund distributor’s recommendation, as well as fund and fund management company characteristics. The results demonstrate that fund and fund management company flows have significantly different patterns according to distribution channels, and fund distributor flows are affected by their financial business segment, market share, vertical relation, and company evaluation grade. However, these tendencies are apparent in non-affiliated product selling. This result contributes to provide the insight that changes in the incentive structure of distribution channels may lead to different outcomes in terms of investor protection and market competition. Charging an asset-driven front-end load and a performance-driven regular distribution fees to compensate for distribution companies can be an example to enhance the market competition.