This study empirically analyses several factors that affect financial stability such as the
profitability of Korean credit card firms, capital adequacy, loan soundness, and liquidity.
In particular, internal and external factors found in previous studies were applied to the
analysis in order to investigate whether or not those factors had a significant effect on the
business stability of Korean credit card firms. The major research findings are as follows.
First, the determinant factors for profitability were found to be the degree of enlargement,
foreign credibility, and the level of risk management. Second, the determinant factors for
capital adequacy were found to be the degree of enlargement, diversification, foreign
credibility, the level of management, and the interest rate. Third, the determinant factors
for loan soundness were found to be the degree of enlargement and foreign credibility.
Lastly, the determinant factors for liquidity were found to be the degree of diversification,
foreign credibility, the level of risk management, the degree of competition, economic
conditions, and the interest rate. In conclusion, with the recent reduction in the card
affiliates’ fees, the leverage regulation, and the credit card debt suppression policy,
financial authorities will likely refer to this study as they carefully examine the various
influences on the business stability of domestic credit card firms and come up with
relevant countermeasures for the continuous growth of those firms
