A Study Of Comparative Advantage Of Internet Banking In Hong Kong
Chapter 1. Introduction
1.1 Background
It is commonly accepted in the financial industry that the change to the 21st century is probably the most exciting time in history to be studying financial markets and institutions. In Hong Kong, the current trend is the movement from traditional branch banking to Internet banking, which provides many benefits, challenges, and also opportunities for the whole banking sector.
Hong Kong is an international financial center well known for its efficiency and its ability to adapt and keep up with the times. These are the traits that have made Hong Kong what it is today - a powerful economic leader in the modern world. Given also that it is a Special Administrative Region of China, worldwide investors have recognized the potential of Hong Kong and have come to this small and densely populated area to expand their horizons. With an area of only 1,100 km2 and a population of 6.8 million people, Hong Kong is crowded with a total of 215 authorized banking institutions, including 134 licensed banks, 42 restricted licensed banks and 39 deposit-taking companies (HKMA, 2003 annual report). Among these licensed banks, 23 were incorporated in Hong Kong and 111 were incorporated outside of Hong Kong.
There are three categories of bank that are widely used by the general public in Hong Kong for banking services. They are international banks, local based banks and Chinese banks. Major players under these categories are exemplified by Hongkong and Shanghai Banking Corporation (HSBC), Bank of East Asia (BEA) and Bank of Communications (BOCOM).
Recently, Chinese banks in Hong Kong are losing competitive advantages. Several reasons have been suggested for the loss in competitiveness: conservative, lack of technological advancement and the progression of aggressive new competitors from all over the world. Since 1998, the economic recession in Hong Kong has caused profit...
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