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Foreign Banks in the Pacific: Some History and Policy Issues

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  • Adrian E. Tschoegl

Abstract

Foreign banks now dominate retail banking in the territories, commonwealths, and nations of the Pacific Islands. Generally, banking is highly concentrated, with two Australian banks dominating the Australian sphere of influence, and three French banks dominating the French sphere. The situation in the U.S. sphere is a little more diverse, though in all three spheres there are situations of monopoly. The foreign banks have certain desirable attributes but also limitations. Locally-owned banks have complementary strengths, but also over-riding weaknesses. Government-owned banks have had a particularly unsuccessful history as political lending has frequently led to the banks’ failure. On balance, banking in the region calls out for innovative responses.

Suggested Citation

  • Adrian E. Tschoegl, 2003. "Foreign Banks in the Pacific: Some History and Policy Issues," Center for Financial Institutions Working Papers 03-10, Wharton School Center for Financial Institutions, University of Pennsylvania.
  • Handle: RePEc:wop:pennin:03-10
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    File URL: http://fic.wharton.upenn.edu/fic/papers/03/0310.pdf
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    References listed on IDEAS

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    1. Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005. "Does function follow organizational form? Evidence from the lending practices of large and small banks," Journal of Financial Economics, Elsevier, vol. 76(2), pages 237-269, May.
    2. Merrett, D. T., 2002. "The internationalization of Australian banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 12(4-5), pages 377-397.
    3. Du, Julan, 2003. "Why do multinational enterprises borrow from local banks?," Economics Letters, Elsevier, vol. 78(2), pages 287-291, February.
    4. Cole, Rodney V., 1993. "Economic development in the South Pacific promoting the private sector," World Development, Elsevier, vol. 21(2), pages 233-245, February.
    5. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    6. Shiers, Alden F., 2002. "Branch banking, economic diversity and bank risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(3), pages 587-598.
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    Keywords

    foreign banks; Pacific islands; bank failure;

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