Financing Of Financing And Financing

1723 Words7 Pages
I. Introduction Financing methods of enterprises are categorized into the indirect financing and direct financing depending on whether financial institutions such banks are involved in the financing process. The indirect financing means financing acquired from financial institutions based on policy funds of the government or funds formed by the financial institutions themselves. And the direct financing means capital-raising through stocks or private bonds issued in the capital market. For the last several centuries, the financial markets have been dominated by the bank-centric indirect financial market. Today, however, the center of the financial market is moving toward the direct financial market thanks to the development of the financial market. The capital market has become an essential element not only of financing in the private sector but also of national economic development, because the scope of financial transactions has expanded by a great deal by means of securities such as stocks and bonds. To look into the past stages of the Korean economic development, a bank-centric financial system was maintained at the earlier stages while the banks played the role of a window for capital supply for the economic development. Later, beginning in the 1990s, the Korean capital market was opened in a phased manner in the trend of the global financial opening. Then, the Korean financial system started to be transformed to one centered on the capital market as the opening of
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