Abstract
This paper analyzes the deposit-takingmarket in Hong Kong prior to the deregulation ofinterest rates in 1994. We argue that bankingregulations, in the forms of branching restrictionsand interest-rate ceilings, had created amonopsonistic market for short-term bank deposits. Asa result, banks in Hong Kong had earned asubstantially wider interest-rate margin than banks inother Asia-Pacific countries and the United States. We provide procedures to estimate the economicsignificance of the foregone interest and find themonopsonistic rent to be in the order of 1% of theGross Domestic Product of Hong Kong for the period1987 through 1994.
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Chan, B.Y., Khoo, T. An Analysis of the Deposit-taking Market of Hong Kong. Review of Industrial Organization 13, 651–667 (1998). https://doi.org/10.1023/A:1007756828258
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DOI: https://doi.org/10.1023/A:1007756828258