Korean Ethnic Banking Los Angeles

Abstract

Objectives: This study analysis the status of the Korean ethnic banks which operated in Los Angeles where a large percentage of Korean residents in the U.S. is concentrated. Methods/Statistical Analysis: Using data published by the Federal Deposit Insurance Corporation (FDIC), quantitative analyses have been performed on the asset, employment, market share and other features of selected Korean American financial institutions. Also using in-depth interviews with financial institution personnel the role of Korean American financial institutions in the Korean American economy and the relation with the mainstream financing of Korean American finance are analyzed. Findings: The issues faced by Korean American banks are summarized into five items: 1. The high dependency of financing to savings, 2. Korean American banks’ excessive concentration on Real Estate Loans, 3. Cost issues caused by the increase of financial labor demand, 4. Concerns on future profits and growth engines, 5. Competition with U.S. mainstream banks. Solutions for these issues are as follows; 1. The dependency on savings should be reduced by diversifying the financing sources of Korean American banks. 2. It is suggested that commercial and industrial loans and loans to individuals should be actively developed by increasing the expertise on the risk evaluation. 3. In order to improve the efficiency of banks, it is necessary to reduce employments and make bold investments to develop information and communication technologies and the banking services. 4. New growth resources along with the external growth should be developed. 5) To counter competition from mainstream banks, it is recommended that measures to absorb other Americans beyond Korean Americans as their customers should be developed. Improvements/Applications: Korean American banks are growing to become major banks with equivalent scale as mainstream banks but they’re still ethnic banks. Andneed researches about policies to develop Korean bank to such mainstream banks.