The banking system of Hong Kong, perspectives on changes and development

by Chan, Yuen Yin

The objective of this thesis is to analyze the development. structure and prospects of Hong Kong's banking system. In pahcdar. it attempts to investigate the monetary relationship between Hong Kong and Mainland China Through the assessment of the development of banking systems in Hong Kong and to a lesser extent Mainland China this thesis shows how these two economies carried out reforms in response to the changes and challenges to their banking industries, notably, the establishment of the Hong Kong Monetary Authority and the empowered authority of the People's Bank of China. This study illustrates that Hong Kong and Mainland China have already established a close banking relationship. Despite this intimate relationship. the monetary systems of Hong Kong and Mainland China will remain entirely separate even after Hong Kong's return to China in 1997. As a small open economy, Hong Kong mut continue to compete with other financial centres in the region, such as Singapore which stands out as an imminent cornpetitor of Hong Kong. This study concludes that the future development of the Hong Kong banking industry will hinge on whether Hong Kong can maintain its openness to the international cornrnunity and exercise proper and prudent supervision over its financiai institutions. More importantly, the economic and political development of Mainland China, if this continues on the right track. will M e r boost the sustainable developrnent of Hong Kong's economy.