A recent analysis by the Korea Financial Institute reveals that a considerable share of the funding obtained by banks and non-banking financial institutions in South Korea is primarily dedicated to acquiring financial securities aimed at profit maximization, rather than supporting corporate bonds or loans. This trend is underscored by the observation that the net amount of debt securities issued within financial corporations is projected to increase by 124.6% in 2024, further entrenching a 54.3% proportion of net acquisitions of these securities within the financial sector.

As funds raised from instruments like short-term bonds are predominantly reinvested within the financial industry, they fail to flow into real sector companies that need financing for productive investments. A notable example includes the striking rise in purchases of debt securities issued by opportunistic financial entities, which illustrates how capital is being trapped within the financial loop, inhibiting broader economic growth and development of the corporate sector.

The Korea Financial Institute highlights the urgent need to direct the financial intermediation activities of these institutions to support physical corporations rather than allowing funds to circulate exclusively within the financial system. This call to action stresses that excessive profit-seeking behaviors can increase interconnected exposures among financial entities, and emphasizes the importance of qualitatively assessing financial corporations' performances in venture capital supply to ensure funds are allocated to high-productivity real enterprises, mitigating the risks associated with solely intra-financial sector transactions.