This dissertation is an inductive analysis of the development of the banking industry in Hong Kong. It argues that the policy networking model is the most appropriate ideal type for understanding the configuration of power relations among interest groups behind the regulation of banking in colonial Hong Kong. It interprets the historical development of the banking system by looking at the configuration of power relations which bears on the public policy-making process. In more concrete terms, the result of the investigation shows that the regulatory framework of the banking system in colonial Hong Kong was not fair to all players. There was an interest-differentiated institutional framework, by which British banks got more privileges than other players. From the early days, the dominant British banks and the colonial state elite formed a policy network, under which both sides reaped mutual benefits. The banking policy network orchestrated the regulatory institutions and formulation of Government policy on banking in Hong Kong. These institutional factors, in turn, structured the interest distribution in the market, and consolidated/legitimated British banks' rent-seeking and privilege. However, the change of political environment in Hong Kong (i.e. the decolonization) triggered fundamental changes in the barking policy network, and, in turn, led to reconfiguration of the regulatory framework of banking.
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