Finance Dominates Human Activity
Finance Dominates Human Activity
  • Suh Young-sook
  • 승인 2023.01.13 14:15
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     Human life itself can be said to consis of continuous consumption activities. Consumption activities that support modern people‘s lives are impossible without the role of finance through spending money. The basic economic theory classifies companies, individuals, and governments as subjects of consumption activities, and explains the role of finance by linking these subjects with surplus funds. According to this theory, finance plays a role in distributing capital from surplus to deficit. Now that information technology and communication technology are extremely developed, it is not an exaggeration to say that finance dominates the entire human activity. The development of digital technology has incorporated human life itself into finance by connecting various industrial fields that operated individually and independently with the service areas provided by finance. Now, all areas of our lives are forced to lie within the influence of finance, whether directly or indirectly. In this light, it will not be easy to enjoy a rich life without understanding the properties and functions of finance. The financial industry makes profits by utilizing information asymmetry. The difference in information asymmetry between financial service providers and financial consumers is directly related to the profit structure of financial institutions. Being opaque is a good basis of legitimate redundancy.

     Historically, excessive greed of financial institutions or financiers led to numerous financial accidents, thus hindering economic development, and promoting social distrust, as well as ruining the lives of unrelated good citizens and resulting in skepticism and negative images of functions of finance. However, if we understand the properties and functions of finance and engage in consumption activities, finance will provide a net function that makes our lives much richer. After the financial crisis in the United States in 2008, the leaders of G20 discussed head-to-head to utilize finance as a driving force to solve poverty by focusing on the net function of finance. The World Bank Group, BIS (Bank for International Settlement), and IMF (International Monetary Fund) think that financial services that use digital technology can alleviate poverty, and are working to lay the foundation to provide financial services in new ways. This activity is a key element of the Financial Inclusion Initiatives introduced by financial authorities around the world, and implemented in various forms. In Korea, financial authorities have also introduced Financial Inclusion to provide various financial services to the low-income or vulnerable population under the term, ‘Financial Inclusion.’

     The digitalization of the global economy provides numerous sources of ideas to provide digitized forms of financial services to unserved people in developing countries due to lack of financial infrastructure, and underserved people in developed and developing countries due to lack of income. As part of the Financial Inclusion Initiatives in 2012, BIS held an international conference to shape up ‘Account Open’ as a starting point for financial services and, in 2014, it first used the term ‘Digital Financial Inclusion’ to emphasize awareness and expansion of the base of financial services provided by digital technologies, and not existing financial institutions.

     In Korea, it is possible only to have an account that supports financial functions, especially payment functions, in a form that began a long time ago, but is converted to digital transactions. Digital transformation combines new ideas, and provides various services on the cyberspace, changing the way finance works through new experiences. Now, the digital type of account enjoyed by people in developing countries is beyond the payment function, and the Gateway that can receive various financial services, such as receiving wages, deposit or installment savings, and remittances to children abroad. Digital transformation has been a stepping stone to the transition to property.




Suh Young-sook

(Professor at the Graduate School of Business Administration)

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