2 - Hong Kong, 1841–1997

Summary

This chapter provides a brief financial history of Hong Kong’s financial regulation and financial crises between 1841 and 1997. In the beginning, financial markets were subject to market-based regulation and the British colonial legal influence. Hong Kong took a long time to embrace financial regulation. The chapter argues that Hong Kong’s financial markets and the origins of financial regulation have developed, evolved, and shaped in response to a series of financial crises. Hong Kong underwent extensive market and regulatory change when the first modern banking crisis and stock market crash battered the economy between the mid-1960s and the early 1970s. The deposit-taking company and banking crises of the 1980s provided the impetus to develop the current regulatory and supervisory architecture. By 1997, subsequent regulatory reforms had shaped this architecture to resemble other developed financial centres, with the banking, securities, and insurance sectors having a designated supervisor and ordinance.