Korea Credit Guarantee Fund and Its Contribution to the Korean Economy

Table 21 Estimates of costs and benefits of KODIT 15(Unit : billion KRW)The above table shows that the benefits of KODIT exceed the costs. The Benefit to Cost(B/C) ratio 16 which shows the efficiency of a public institution has ranged from 5.2 to 7.3 times,which implies the operation of KODIT has been efficient.VII. Recent innovation effort and future development strategyKODIT has made great contribution to the development of SMEs as well as overcomingnational challenges such as the oil shock and the financial crisis. Nevertheless, it was pointedout that the overblown amount of credit guarantee since the financial crisis hindered theworking of the financial market based on market principle, prolonged the life span of marginalSMEs and placed a heavy burden on the national economy due to the high cost in operating theguarantee scheme. In response to this, KODIT derived a new corporate vision HOPE-KODITwhich aims at operational, organizational, personnel innovation with an ultimate goal of pursingself-sustainability. Each character of HOPE stands for healthy capital structure, optimal SMEsupport, professional workforce and ethical operation. HOPE symbolizes the strong will ofKODIT to achieve systematic innovation with a market friendly approach. To achieve thisvision, KODIT set up three objectives; (a) reducing default rate to 4% until 2008, (b)eliminating high cost low efficiency factors, (c) balancing public interest and commercialism,contrary to the previous approach which solely focused on public interest.15 The results for year 2003 to 2005 were calculated by KODIT using the methodology of KIET.16 A public project is said to be efficient when the ratio is equal to or above 1.122