Investigates the effects of interest rate rules for banks in Hong Kong, as well as investors. With the rules of the interest rate, Hong Kong Association of Banks acted as a cartel to set a maximum interest rate of certain Hong Kong dollar deposits. Charging almost uniform interest rates, banks in Hong Kong relied on non-price competition to attract deposits. After the deregulation of interest rates in the 1990s and 2000s, the banks have the right to set the rates on deposits in line with market conditions and their own strategies. Despite the general expectation of banks offering higher rates to compete for deposits, weak demand and ample liquidity loan from the Asian financial crisis, the veiled potential price competition among banks. Detects changes in the interest rates on deposits and deposit base, as well as cost-effectiveness and risks of banks. The results provide the evidence base for the analysis of competition in the banking industry. "Hide
by Yue-Chim Richard Wong, Alexandra Yiu, Jennifer Lee, Jack Lee, Ka-Fu Wong Source: University of Hong Kong, 20 pages. Publication Date: July 23, 2004. Prod. #: HKU340-PDF-ENG
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