Hong Kong and Singapore: A Financial Profile

  • Y. C. Jao


It is a familiar observation in economics that case studies of particular countries can often be enriched by making comparative references to others more or less at a similar stage of development. In the case of our present study, additional insights can be gained into the salient features of Hong Kong’s banking sector, its strengths and weaknesses, by discussing them within a wider framework of reference. For obvious reasons an exhaustive comparative study of banking systems, involving Hong Kong and other countries, is not a feasible proposition. Instead, this chapter will be devoted to a banking profile of two countries only: Hong Kong and Singapore.


Central Bank Commercial Bank Money Supply Institutional Framework Monetary Authority 
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Notes and References

  1. 1.
    Census and Statistics Department, Estimates of Gross Domestic Product 1966–71, (Hong Kong, 1973).Google Scholar
  2. For a comparative study of consumption pattern, see T. Y. Cheng, The Impact of Industrialization upon Consumption Pattern With Special Reference to Hong Kong and Singapore, (Hong Kong, 1971).Google Scholar
  3. 2.
    W. M. Clarke, ‘World Banking in the 1980s’, The Banker, (Oct 1971) p. 11–73.Google Scholar
  4. Jay Rabb, ‘Asia’s Financial Centres’, Far Eastern Economic Review, Banking in Asia Focus (9 Apr 1973) pp. 17–21.Google Scholar
  5. 3.
    For more detailed description of Singapore’s currency system before 1970, see F. H. H. King, Money in British East Asia (London, 1957) chapters 2–4Google Scholar
  6. P. J. Drake, Financial Development in Malaya and Singapore, (Canberra, 1969) chapters 2–6Google Scholar
  7. Lim Chong Yah, Money and Monetary Policy (Singapore, 1969) chapters 1–3Google Scholar
  8. Lim Chong Yah and Doreen Phua, ‘Monetary System and Banking Structure’, in You Poh Seng and Lim Chong Yah (eds), The Singapore Economy (Singapore, 1971) pp. 127–59. The interchangeability between the currencies of Malaysia and Singapore was however unilaterally suspended by Malaysia in May 1973.Google Scholar
  9. 4.
    These terms are used in Susan Strange, Sterling and British Policy (London, 1971).Google Scholar
  10. 6.
    For an empirical study, see G. W. Betz, ‘A Note on the Money Supply in Singapore, 1957–1966’, Malayan Economic Review (Oct 1967) pp. 116–21.Google Scholar
  11. 7.
    P. Cagan, The Demand for Currency Relative to Total Money Supply, (New York, 1958)Google Scholar
  12. J. D. Khazzoom, The Currency Ratio in Developing Countries (New York, 1966).Google Scholar
  13. 9.
    For the ‘monetarist’ position on monetary policy see, inter alia, M. Friedman, A Program for Monetary Stability (Fordham, 1959)Google Scholar
  14. M. Friedman, ‘The Role of Monetary Policy’, American Economic Review (March 1968) pp. 1–17Google Scholar
  15. D. I. Fand, ‘A Monetarist Model of the Monetary Process’, Journal of Finance Papers and Proceedings (May 1970) pp. 275–89.Google Scholar
  16. 10.
    For a discussion of the distinction between these two concepts, see A. B. Cramp, ‘Does Money Matter’, Lloyds Bank Review (Oct 1970) pp. 23–7. Hong Kong’s post-war record clearly shows that it has been able to achieve reasonably well the goals of high employment, price stability, external equilibrium, and economic growth without a central bank. However, the recurrent banking crises in the sixties also demonstrate that the record of banking stability is not a happy one.Google Scholar
  17. 11.
    See also S. Y. Lee, ‘A Note on Banking and Currency in Singapore’, Malayan Economic Review (Oct 1967) pp. 122–6.Google Scholar
  18. 14.
    For a description of commercial banking in Singapore, see D. Williams, ‘Commercial Banking in Far East’, The Banker (June 1963) pp. 418–26Google Scholar
  19. D. Williams, ‘Malaysia’, in W. F. Crick (ed), Commonwealth Banking Systems (London 1965) pp. 143–70Google Scholar
  20. Tan Ee Leong, ‘The Chinese banks incorporated in Singapore and the Federation of Malaya’, in T. H. Silcock (ed), Readings in Malayan Economics (Singapore, 1961) pp. 454–79Google Scholar
  21. S. Y. Lee, ‘The Development of Commercial Banking in Singapore and the States of Malaya’, Malayan Economic Review (Apr 1966) pp. 84–100Google Scholar
  22. Lim Chong Yah, The Economic Development of Modern Malaya (London 1967) pp. 231–51Google Scholar
  23. Tan Hui Boon, A Study of Commercial Banking Practices in Singapore, Ministry of Finance (Singapore, 1969)Google Scholar
  24. T. M. Attwood, ‘International Banking in Singapore’, The Banker (Oct 1970) pp. 1090–5Google Scholar
  25. B. K. Short, ‘Indigenous Banking in An Early Period of Development: The Straits Settlements 1914–1940’, Malayan Economic Review (Apr 1971) pp. 57–75.Google Scholar
  26. 15.
    In early 1973 the MAS decided to restrict new foreign banks to offshore activities, i.e. these banks are required to concentrate on the Asian Dollar Market and foreign exchange transactions, and are prohibited from operating Singapore dollar accounts. Thus there are now three categories of foreign banks: the first group consists of twenty-four foreign banks which opened branches before March 1964, and which continue to be treated equally with the local banks; the second consists of eleven banks which came to Singapore between 1970 and 1973: they are permitted to do almost everything except accepting Singapore dollar deposits below S$250,000. The third group consists of the ‘offshore’ banks mentioned earlier. See A. Senkuttuvan, ‘Singapore: Intense Activity’, Far Eastern Economic Review, Banking in Asia Focus (9 Apr 1973) pp. 87–8.Google Scholar
  27. 18.
    W. F. W. Bischoff, ‘Merchant Banking: The Concept Matures’, Far Eastern Economic Review (1 Apr 1972) Banking in Asia Focus, pp. 68–72.Google Scholar
  28. N. A. Edgerton, ‘A Merchant Bank Is Born’ Far Eastern Economic Review, (30 Apr 1970) Banking in Asia Focus, pp. 55–60.Google Scholar
  29. 19.
    For details, see W. F. W. Bischoff, ‘Merchant Banking: A Revolution Gains Momentum’, Far Eastern Economic Review, Banking in Asia Focus (9 Apr 1973) pp. 24–30.Google Scholar
  30. 27.
    J. D. Van Oenen, ‘The Asian Dollar’, The Banker, (Oct 1970) p. 1096. The withholding tax was previously 40 per cent.Google Scholar
  31. 28.
    Dick Wilson, ‘Singapore Widens Its Lead’, Far Eastern Economic Review (1 Apr 1972) (Banking in Asia), p. 61.Google Scholar
  32. For earlier accounts see also S. Y. Lee, ‘The Asian Dollar Market in Singapore’, Malayan Economic Review (April 1971) pp. 46–56Google Scholar
  33. S.A. Pandit, ‘The Asian Dollar and Free Gold Markets in Singapore’, Finance and Development (June 1971) pp. 32–6.Google Scholar
  34. 29.
    See G. M. Ferris Jr, A Study of the Securities Market in Singapore and Malaysia (Singapore, 1970).Google Scholar

Copyright information

© Y. C. Jao 1974

Authors and Affiliations

  • Y. C. Jao
    • 1
  1. 1.University of Hong kongChina

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