Trade, Investment and Competition in International Banking
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Book Review Trade, Investment and Competition in International Banking Aidan O’Connor Palgrave Macmillan, 2005; ISBN: 1-4039-4132-7; xiv þ 193pp Journal of Banking Regulation (2007) 8, 195–197. doi:10.1057/palgrave.jbr.2350042
International competition in banking services has been examined in relatively few comparative studies. The subject can be approached from the point of view of the competitiveness of financial markets or centres, or from that of the performance of financial firms — the latter usually also serving as the basis for observations concerning the competitiveness of the financial sectors of the firms’ parent institutions. Under the first heading are studies such as the City Research Project on the Competitive Position 1 of London’s Financial Services. Work under the second heading is more abundant but also more amorphous since much writing on banks and banking, both journalistic and academic, contains material bearing on competitiveness, even when this is not the main topic. Rarer are books bringing together both subjects in a systematic way, an outstanding example being Anthony Smith’s comparative study for the National Institute of Economic and Social Research of the competitiveness of the United Kingdom’s financial service sector at the time of the full liberalisation of the European Economic Community’s financial market in 2 the early 1990s. O’Connor’s book is in the same tradition as Smith’s, but its backdrop is the broader context of current international regulation and trade negotiations. In his first chapter, O’Connor provides indispensable historical background. The main focus is on the period pre-1939, although there is also a brief account of international banking
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consortia in the 1960s and 1970s. The emphasis of the chapter is on the development of the major financial centres and the origins of many of today’s large banks. While helpful, I thought the treatment would have benefited from a more systematic description of the major categories of banking transaction and their historical development as well as from more attention to the evolution of policy towards the sector. The former could have brought out more fully the quintessentially international character of much banking business throughout the history of the major European financial centres. The evolution of policy involves several issues with a bearing on international initiatives discussed in the book. The role played by banks in financing governments — a role which has often been a source of enormous, if sometimes tacit, political power and a subject which is mentioned but not elaborated by O’Connor — is one part of this story. Others are standard subjects raised under the heading of policy towards banks such as the influence of their lending on resource allocation (and thus the pace and character of economic development) and their integral connection to financial stability due to their participation in systems of payments and settlement well as to their broader role in the provis
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