Basic Report

This study tries to first describes the factors that differentiate local banking from national banking and the necessity of relationship banking, and seeks ways to increase the financial accessibility to local residents.
   The purpose of establishing credit unions is to contribute to the development of the local economy by providing financial services to its members and local residents.
   Contrary to this purpose, some problems can be pointed out in the operation of regional credit cooperation organizations.
   First, although the decline is less than that of commercial banks, the number of credit union branch is on a steady decline. The decrease in the number of branches is not only limits the financial access to local residents, but also raises concerns about reducing jobs in regions where the branches are consolidated.
   Second, credit unions and other regional financial institutions have broadened their business districts. The broadening business districts can be helpful in improving the management efficiency and profitability of credit unions, but this should not hinder local residents’ financial access.
   Third, the deterioration of consumers’ financial access can be a bigger problem in regions where the dependence of credit unions is high, especially due to the absence of local banks.
   In this study, the Financial Inclusion Index (IFI) was calculated and analyzed for each region and for the ‘Saemaul Geumgo’(MG Community credit cooperative) and the ‘Shinhyup’ (credit union) as an analysis tool for evaluating the role of local financial institutions for inclusive finance. Variables for calculating the financial inclusion index measured in three major areas: (1) the degree of financial institutions’ local penetration, (2) the degree of financial service provision, and (3) consideration of the low and mid-credit groups.
   First, it is shown that the radial graph of the credit union is broader overall than the Saemaul Geumgo, and the national average comparison shows that the credit union has a relatively higher IFI value than the Saemaul Geumgo.
   As a result of examining the trend of the local finance inclusion index over time, it is judged that Saemaul Geumgo has room to improve its current level.
   Based on the inclusion index calculated in this study, Saemaul Geumgo’s financial inclusion index has declined since 2018, and the national IFI level has not reached the previous level of 2014. Therefore, considering the potential of Saemaul Geumgo, such as the number of members and managing asset, Saemaul Geumgo has to increase its contribution to the local finance and social economy.
   To do this, it is necessary to expand the funding and support for Saemaul Geumgo’s social enterprises. In addition, Saemaul Geumgo, which is based in the region, needs to utilize of its strength as a relationship banking institution. Lastly, it is necessary to steadily increase the number of members in the region in the long term by expanding the benefits to the members who are shareholders of the Saemaul Geumgo.