Banking crises and the evolution of the regulatory framework in Hong Kong 1945–1970

Schenk, Catherine R.

doi:10.1111/1467-8446.t01-1-00047

Cited by 11 publications

(5 citation statements)

References 2 publications

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“…As depositors panicked that year, the government injected liquidity into ailing banks to prevent a collapse of the financial system. For Cowperthwaite, this emergency highlighted the importance of ensuring that the government had ample liquid reserves immediately available to reverse a credit squeeze caused by bank runs during a financial crisis, 71 although, in practice, the reserves did not have to be deployed on a substantial scale to meet such situations. 72 The case for self-reliance was further strengthened by London's behavior in the anticolonial campaign of 1967.…”

Section: Savings Vs Investmentmentioning

confidence: 99%

Fiscal freedom and the making of Hong Kong’s capitalist society

Goodstadt

2010

China Information

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Fiscal autonomy is a defining principle of China's arrangements for Hong Kong's postcolonial administration and was a major feature of British rule before 1997. This article begins with a discussion of how this colony achieved unusual freedom from London's usual oversight of colonial governments. After rejecting Colonial Office demands for a modern income tax, Hong Kong stuck to the principle of "low tax, small government," defying London's repeated calls for increased public expenditure on social development while resisting local business pressures for subsidies and tax concessions. The analysis then identifies fiscal freedom's contribution to Hong Kong's growth as an international financial center. The discussion explains the link between Hong Kong's unfashionable fiscal conservatism in the 1950s and 1960s and the buildup of government reserves to a level which permitted Hong Kong to control its own monetary affairs, including an independent currency. The final section assesses the gains and losses, both economic and social, which accompanied this fiscal independence. The analysis makes extensive use of unpublished archival material.

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Section: Savings Vs Investmentmentioning

confidence: 99%

Fiscal freedom and the making of Hong Kong’s capitalist society

Goodstadt

2010

China Information

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“…These differences involved the rate of growth of the world economy, the mechanisms through which financial contagion was spread, the degree of national economic sovereignty, and changes in the economic and trade structures of East Asian economies. Schenk’s article demonstrates that significant regulatory reforms were important determinants of the ability of the Hong Kong banking sector to withstand the 1990s crisis, and Huff’s comparative analysis of Chinese deposit banking in Malaya and the Philippines before 1945 shows that the operation of currency boards (a strict version of the classical gold standard), nearly pushed Chinese banks into bankruptcy during the slump of the 1930s. Cheng‐Chung and a co‐author provide additional evidence that the silver standard helped to insulate the Chinese economy from the Great Depression.…”

Section: (V) Since 1850  David M Higgins  University Of Sheffieldmentioning

confidence: 99%

Review of periodical literature published in 2003

2005

The Economic History Review

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“…In 1964 and in 1972 these three banks accounted for over 40% of total Mainland banks' deposits in Hong Kong, although their share dipped below 40% 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 Figure 3. 10 After making significant initial progress, confidence among depositors in the Mainland-associated banks never recovered from the disruptions of 1967 and the ensuing political strife on the Mainland. By 1981, after the Open Door policy was in operation, Mainland controlled banks restored their share of deposits to 14% and increased their share of advances to a historically high level of 15%.…”

Section: Introductionmentioning

confidence: 99%

Banking and Exchange Rate Relations between Hong Kong and Mainland China in Historical Perspective: 1965–75

Schenk¹

2009

Hong Kong SAR’s Monetary and Exchange Rate Challenges

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While the rapid growth and development of the Mainland economy after 1999 outstripped many predictions, the relatively poor performance of Hong Kong from 1997 until 2003 has changed the context in which the one country two currencies system operates. The de-linking of the RMB from the US$ and subsequent appreciation from July 2005 has further complicated the monetary relations between Hong Kong SAR and the rest of China. Hong Kong's interest rates and monetary policy are now arguably more closely aligned with those of the USA than those of its main trade partner. The increased use of RMB in banking and other transactions in Hong Kong SAR is further evidence of the erosion of the barriers between the two currencies. In February 2008, RMB deposits in Hong Kong had reached RMB47.8 billion, an increase of 92% over a year, although this still represented only 0.8% of total deposits in Hong Kong. Cross-border financial flows within the banking system have also accelerated with the accumulation of net liabilities in Hong Kong to banks on the Mainland since 1999.2 Once the RMB and the HK$ reached parity against the US$ in January 2007 there was a psychological shift in attitudes about the relative merits of each currency as well real concerns over the potential impact of the appreciation of the RMB on the cost of imports into Hong Kong from the Mainland. 3 The potential for further appreciation of the RMB against the HK$ poses challenges as well as opportunities for Hong Kong consumers and producers and heightens public attention on the implications of separate currencies within a single country.The financial, monetary and banking relations between Hong Kong and Mainland China have a long and intimate history that should be borne in mind when assessing the challenges faced by the separate monetary systems operating today. As Chan's chapter in this volume shows, due to the commercial integration of the region, the HK$ circulated widely in Southeast China both as a store of value and as a medium of exchange. This monetary integration increased during the collapse of China's monetary system in the late 1940s. 4 With the establishment of the PRC, HK$ were collected by the new government of China and their use in private transactions was prohibited in order to promote the new national Chinese currency. Banking relations between the two territories were never severed but they were put under severe strain by the nationalisation of banking and commerce in the early 1950s. Nevertheless, this article will emphasize that there was considerable continuity in the banking relations between Hong Kong and Mainland China and will explore the operations and implications of exchange rate dynamics in the 1960s and 1970s when the global fixed exchange rate system collapsed, destabilising the exchange rate between the HK$ and RMB. An important contribution is to present new data on the activities of Mainland Chinese banks operating in Hong Kong during this period, collected from official archives. This data confirm the extent of cross-border...

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Banking crises and the evolution of the regulatory framework in Hong Kong 1945–1970

Cited by 11 publications

References 2 publications

Fiscal freedom and the making of Hong Kong’s capitalist society

Fiscal freedom and the making of Hong Kong’s capitalist society

Review of periodical literature published in 2003

Banking and Exchange Rate Relations between Hong Kong and Mainland China in Historical Perspective: 1965–75

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