How has the Innovation Capacity of the Korean Banking Industry Changed?

This study analyzes the efficiency trends of Korean retail banks during and after the 2007-2008 global financial crisis using the Super-DEA Window methodology, with a focus on changes in the innovation capacity of the banking sector. The findings reveal that larger, globally integrated banks experienced significant efficiency fluctuations during the crisis, reflecting their vulnerability to external economic shocks. In contrast, local and specialized banks showed greater resilience and stability, suggesting the benefits of focused operations. While global integration offers advantages, it also increases the risk of efficiency volatility in uncertain times. The study also suggests that higher profitability often reflects ongoing innovation, though more vulnerable banks may be hesitant to invest in operational enhancements due to the risks associated with global exposure. However, the study is limited by its methodological approach and timeframe, which may not fully capture all factors affecting bank performance, particularly the impact of the COVID-19 pandemic.