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An Analysis of the Deposit-taking Market of Hong Kong (1997)
BibTeX
@MISC{Chan97ananalysis,
author = {Bob Chan and Bob Y. Chan and Terence Khoo and Terence Khoo},
title = {An Analysis of the Deposit-taking Market of Hong Kong},
year = {1997}
}
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Abstract
. This paper analyzes the deposit-taking market in Hong Kong for an extended period prior to the deregulation of interest rates in 1994. We argue that banking regulations, in the forms of branching restrictions and interest-rate ceilings, had created a monopsonistic market for term bank deposits. As a result, banks in Hong Kong had earned a substantially wider interest-rate margin than banks in other Asia-Pacific countries and the United States. Our analysis using rate spreads is consistent with such a conjecture. The discrepancy in interest-rate spreads between Hong Kong and the U.S. was mainly attributable to the lower deposit rates paid by Hong Kong banks, which were in the range of 2 percentage points. We provide procedures to estimate the economic significance of the foregone interest and find the monopsonistic rent to be in the order of 1% of the Gross Domestic Product of Hong Kong for the period 1987 through 1994. Key words: Bank regulation, deposit-taking market, interest-ra...
Keyphrases
hong kong deposit-taking market percentage point interest-rate margin economic significance monopsonistic rent bank regulation hong kong bank extended period asia-pacific country gross domestic product banking regulation term bank deposit interest rate interest-rate ceiling monopsonistic market foregone interest deposit rate interest-rate spread key word rate spread united state
