Hong Kong is usually seen as a laissez-faire paradise for international business. This chapter draws on archival sources to show that, contrary to this image, the internationalisation of the banking sector was highly contested both by large local banks and by government regulators. Large banks such as HSBC and Chartered Bank sought to protect their market position against international competition through strategies that constrained entry, including a moratorium on new bank licenses from 1965. The inability to get a bank license prompted the expansion of finance companies that operated outside the supervisory or regulatory framework and added to the fragility of the financial system and contributed to the banking crises of 1982-86. Finance companies were required to register their offices only from 1976 and had to provide monthly reports to the banking supervisor only from 1978. This chapter also identifies the strengths and weaknesses of the international financial centre in Hong Kong in the period before China’s Open Door Policy was launched in 1978, with particular focus on the regulatory environment and the range of activity. Measuring Hong Kong’s international financial flows (including remittances to the mainland) has been hampered by the lack of official statistics and this chapter presents new data gleaned from archive sources.
Catherine Schenk (2011) The re-emergence of Hong Kong as and international financial centre 1960-78: contested internationalisation. In: Quennouelle-Corre, L. and Cassis, Y. (eds.) Financial Centres and International Capital Flows in the nineteenth and twentieth centuries. Oxford University Press, Oxford, pp. 299-253. ISBN 9780199603503
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