Korea’s Traditional Community Finance “Gye”: Its Expansion into Social Finance (Part 1)

 In the previous post, I explained how social impact is embedded in the cultural memory of Koreans through traditional practices such as Gye and Dure.

 

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Today, I would like to take a closer look at the culture of Gye and discuss why it can be seen as having evolved into modern social finance.

 

When people think of finance, most tend to think of banks. I am no exception. Whenever I needed to deal with financial matters such as savings, deposits, or loans, I usually relied on banks. In fact, many people naturally assume that finance begins with banks. Some may also think of investment institutions.

 

However, if we look a little deeper, we can see that Korean society has long had a form of community-based finance centered on relationships. This is what I introduced in the previous post as Gye.

 

What is “Gye”?

 

Gye has taken various forms, but the most widely known is its economic function. Simply put, people who participate in a Gye group (members) regularly contribute a fixed amount of money. Once the pooled funds reach a certain size, the total sum is given to members in a predetermined order. In most cases, it operates on a monthly basis.

 

When I was very young, my mother also participated in a Gye group formed with neighbors. Each month, she contributed a fixed amount (the gye payment) to the organizer of the group, known as the gyeju. When her turn came, she received a lump sum of money. I remember that when it was her turn, the money was often used to replace or purchase important household items.

 

Korean Gye can be understood as a system similar to a ROSCA (Rotating Savings and Credit Association), where participants regularly contribute funds and take turns receiving a lump sum.

 

Why Did “Gye” Culture Expand in Korea?

 

Today, Korea is often described as a global leader in IT and culture, but in the past, it was largely an agricultural society. In such an environment, people were often vulnerable to natural disasters such as floods and droughts. When these large-scale challenges occurred, collective effort was the most effective way to respond.

 

Korean society has long been structured around communities, with villages, extended families, and relatives living closely together. Both good and bad experiences were shared collectively. In such an environment, it was possible to operate financial systems based on trust.

 

In addition, in the past, ordinary people in Korea had limited access to formal financial institutions such as banks. Individuals had to manage their finances on their own or solve financial challenges within trust-based communities.

 

Especially in situations that required large sums of money—such as marriage, childbirth, or purchasing a home—Gye played a crucial role as a financial support system that helped people endure these burdens.

 

Gye is Built on Trust

 

As explained above, Gye in Korea operates based on relationships. It is not only a community-based financial system but also a structure that strengthens social networks and relationships.

 

This raises an important question: why has this traditional form of finance, Gye, evolved into what we now understand as social finance? And what meaning does modern social finance hold today?

 

In the next post, I will explore how Korea’s Gye culture connects to contemporary social finance.

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