#03-10
"Foreign Banks in the Pacific: Some History and Policy Issues"
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.
Keywords: foreign banks, Pacific islands, bank failure
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