For analytical purposes, a bank may be treated in several ways. It may be treated as a legal entity, the functions and activities of which are prescribed by the laws, customs and conventions, and shaped by the historical development of the country in which it operates. It may also be treated as a decision-making unit, whose objective may either be profit-maximisation or sales-maximisation, or some combination of the two. As such it is similar to any other firm, but a bank’s maximising activities are more stringently subject to a liquidity constraint, since it is required to repay its deposit liabilities on demand or at short notice. Moreover, because of its importance as a source of money, and its strategic role in the liquidity position of the economy, there has been a recent tendency by economists to treat the banking industry as a ‘quasi-public utility’.
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Notes and References
- 1.Readers interested in the historical evolution of Hong Kong’s monetary and banking system before 1945 are referred to F. H. H. King, Money in British East Asia (London, 1957) Chapter 5Google Scholar
- F. H. H. King, ‘British Chartered Banking: Climax in the East’, University of Hong Kong Gazette Supplement (1 August 1969) pp. 1–10Google Scholar
- F. H. H. King, ‘The Bank of China is Dead’, Journal of Oriental Studies (Jan 1969) pp. 39–62.Google Scholar
- See also C. H. Yao, Hsiang-kang chin-yung (Hong Kong Money Market), (Hong Kong, 1962) pp. 1–48Google Scholar
- C. F. J. Tom, The Entrepöt Trade and the Monetary Standards of Hong Kong, 1842–1941 (Hong Kong, 1964)Google Scholar
- Sir Compton Mackenzie, Realms of Silver (London, 1954)Google Scholar
- M. Collis, Wayfoong, the Hong Kong and Shanghai Banking Corporation (London, 1965). The last two references are the official histories of the Chartered Bank and the Hong Kong and Shanghai Banking Corporation respectively written in commemoration of their centenaries.Google Scholar
- 5.See J. Marquez, ‘Financial Institutions and Economic Development’, in H. Ellis (ed), Economic Development for Latin America (New York, 1961)Google Scholar
- R. C. Porter, ‘The Promotion of “Banking Habit” and Economic Development’, Journal of Development Studies, Vol II, No. 3 (July 1966) pp. 349–52.Google Scholar
- 7.See R. Cameron (ed), Banking in the Early Stages of Industrialization (New York, 1967) p. 300Google Scholar
- R. W. Goldsmith, Financial Structure and Development (New Haven, 1969) pp. 206–14.Google Scholar