Impact of deposit rate deregulation in Hong Kong on the market value of commercial banks

Simon Kwan

No 2001-11, Working Paper Series from Federal Reserve Bank of San Francisco

Abstract: This paper examines the effects of deposit rate deregulation in Hong Kong on the market value of banks. The release of the Consumer Council's Report in 1994 recommending interest rate deregulation is found to produce negative abnormal returns, while the announcement in 1995 terminating the deregulation program led to positive abnormal returns. Furthermore, news about resumption of interest rate deregulation in 1998 and the official announcement in 2000 to abolish the interest rate rules produced negative abnormal returns. The evidence suggests that Hong Kong banks earned rents from deposit rate restrictions and that relaxation of rate ceilings reduced these rents.

Keywords: Interest rates; Hong Kong (search for similar items in EconPapers)
Date: 2001
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Published in Journal of Banking and Finance, December 2003, v. 27, iss. 12, pp. 2231-2248

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Related works:
Journal Article: Impact of deposit rate deregulation in Hong Kong on the market value of commercial banks (2003)
Working Paper: Impact of Deposit Rate Deregulation in Hong Kong on the Market Value of Commercial Banks (2000)
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