Teacher’s Edition
Hong Kong as
an International Financial Centre
A. Learning objectives
1. To understand the meaning of “finance”
2. To identify the services provided by general financial institutions
3. To understand the development of financial institutions
4. To recognize the role of financial institutions as intermediaries
5. To understand the importance of financial activities to Hong Kong economy
6. To understand the factors that help develop Hong Kong as an international
financial centre
7. To assess the strengths and room for improvement of Hong Kong as an
international financial centre
8. To reflect how Hong Kong can strike a balance between public needs and
corporate interests in the process of economic development, with reference to
banks which closed their branches in recent years
9. To acquire skills of analyzing social issues and expressing views
B. Prior knowledge
General Studies in primary school
Strands
Core elements

Decision-making in simple dilemma situations

Use of pocket money, savings
4: Community and

Goods, facilities and services in the community
Citizenship

Different kinds of work in society

Exchange of goods and services to meet our needs and
1: Health and Living
the needs of others

The differences among people and the need to respect the
rights of others
1

Major features of Hong Kong economy

Factors affecting the economic development of Hong
Kong

The benefits for Hong Kong of trading with other parts
of the world
6: Global

Some current and relevant social issues in the community

Reasons for people to exchange information, goods and
Understanding
services
and the

Distinguishing fact from opinion
Information Era

The interdependence of different parts of the world

The impact of the information era on individuals and the
community
C.
Suggested no. of lessons: 6
D.
Suggested learning activities
Lesson 1-2
1. Before the end of last lesson, distribute 【Activity 1】to the students so that they
can collect information at home. During the lesson, invite students to share the
information they have collected, then ask students to discuss the questions in
groups. It is hoped that, through the activity, students can identify the services
provided by general financial institutions.
2. Conduct【Activity 2】. This activity aims to help students understand the role of
financial institutions as intermediaries. Ask students to read Source 1. Then, ask
students questions to ensure that they have a good understanding of the concept.
Divide students in groups to discuss case 1 and case 2. Turn to whole class
discussion after small group discussions. After the activity, guide students to think
about the functions of financial institutions in【Activity 1】and【Activity 2】.
3. Conduct 【 Activity 3 】 . Distribute Source 2 and ask
students to read the source before they have group
discussions. In the group, ask students to choose 3 most
important factors from Source 2 and explain how these
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three factors help develop Hong Kong as an international financial centre by
completing Worksheet 1. Show the ETV programme “經濟新動態”which can be
found in “Personal, Social and Humanities Education: A Collection of Education
Television Programme for Secondary School (1) ” Disc 8 “經濟教育”（File
Name: 經濟新動態 ( AVSEQ01-04）). The aim of watching the programme is to
deepen students’ understanding of how Hong Kong develops as an international
financial centre.
Lesson 3-4
1. Conduct【Activity 4】. With reference to Source 3, students assess the strengths
and room for improvement of Hong Kong as an international financial centre.
Students complete Worksheet 2 and report to the class.
2.
In teacher debriefing, emphasizes that the 14 competitive factors are in fact
interrelated, with one reinforcing the other. For instance, while a skilled
workforce is critical to a financial centre, a well-established financial centre will
in turn attract more skilled talents and the virtuous cycle continues.
Lesson 5-6（Extended activity）
Discuss the issue about closure of bank branches with students and facilitates students
in completing Worksheet 3 to help them reflect on how to strike a balance between
the public needs and corporate interests in the process of economic development.
3
Hong Kong as
an International Financial Centre
Activity 1
Everyday we come across different financial institutions
on the street. We learn about the different services they
provide from their advertisements. However, how much
do you really know about financial institutions and the
services they provide?
Collect information on ONE financial institution (eg. a
bank or a securities company) and report to your
classmates.
Name of the
Services
institution
Hongkong
Deposit
Descriptions
The Bank provides a range of Hong Kong
and Shanghai
dollar / foreign currency saving accounts and
Banking
fixed deposits, as well as Hong Kong dollar
Corporation
current account.
Limited
Loans
The Bank provides loan services including
Revolving Credit Facility, Personal Instalment
Loan, overdrafts, mortgage loans and car loans
etc.
Investment
The
Bank
provides
investment
services
including stock trading, fund, Deposit Plus and
bonds.
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Discussion Questions
Refer to Activity 1 and discuss the following questions:
1.
What are the major services provided by the financial institutions in
Hong Kong?
Students may answer the question freely
E.g.: The major services provided by financial institutions are deposition and
withdrawal, loan and investment service etc.
2.
How do people use the services provided by financial institutions?
Students may answer the question freely
E.g.: People go to these institutions directly or use phone/internet banking services
provided by the institutions.
3.
Following question 2, how do the services provided by financial
institutions differ between the past and nowadays?
The financial institutions provide more diversified services which allow their
clients to use their services without physical presence and beyond the working
hours.
4.
In the late 1970s, Hong Kong was known “to have more banks than
grocery stores”. Can you imagine the development of banking
industry at that time?
Students may answer the question freely
E.g.: The banking industry was flourishing.
5.
With reference to Question 4, choose a financial service (eg. banking,
securities or insurance) and think of a slogan to describe the current
development of this industry.
Students may answer the question freely
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From the above activity, we learn about general
services provided by financial institutions.
However, what exactly does “finance” mean?
How shall we understand the term “international
financial centre”?
What is the role of financial institutions in the process of
economic development?
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Activity 2
In Case 1 and Case 2, four people are having problems in handling their money. They
want to ask for your advice. Source 1 can help you solve their problems. After reading
the source, discuss the cases in your group.
Source 1
To my understanding, finance means capital flow which is the transfer of capital
from one with surplus to one who needs. In other words, it is what we commonly
know as the financial intermediate activity – to divert saving to investment in
order to facilitate economic development and growth. If there is a good capital
flow, the economy will prosper… When this definition of finance expands to the
level of international financial centre, it can be understood as a place for
international capital flow. For example, on one hand, Hong Kong can attract
capital in the US to invest in China through Hong Kong financial intermediaries,
on the other hand, Hong Kong can also draw saving in Asia to invest in the
international corporations through buying shares in Hong Kong or investing
through Hong Kong financial intermediaries. Only when Hong Kong fulfills this
role, can it be claimed an international financial centre.
Source: “ 如 何 鞏 固 香 港 的 國 際 金 融 中 心 地 位 ”. Speech by Joseph Yam
Chi-kwong at the Hong Kong Economic Summit 2004, Information Services
Department, HKSAR. http://www.info.gov.hk/gia/general/200312/16/1216092.htm
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Case 1
Mr Chan
I have a lump sum
of money for my
retirement.
What
shall I do to
maintain or even
increase its value?

My child is going to
university this year,
but I don’t have
enough money.
Mrs Lee
How can Mr Chan and Mrs Lee solve their own problems? Are there any difficulties
involved?
1. Solution: Students may answer the question freely
E.g.: Mr Chan can lend his money to Mrs Lee. After Mrs Lee’s son graduates and finds a job, he can
return the money with interest back to Mr Chan.
2a. Difficulty： Students may answer the question freely
E.g.: They may not know or trust each other. They may expect different payback period and different
interest rate. All these make them difficult reach an agreement.
2b. How can the above problems be solved?
Students may answer the question freely
2c. Assume
 can help Mr Chan and Mrs Lee to solve the above problems, what is
? How does it help solve the problems?
Students may answer the question freely
E.g.: It is a bank. Mr Chan saves his money at fixed deposit and earns interest from the bank, and the
bank lends the money to Mrs Lee to ease her financial problem.
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Case 2
I have just inherited
US$5 million, but I
don’t know how to
use the money.

We want to expand
our factory, but we
don’t have enough
capital.
Miss Kitty,
Canadian,
housewife
Mr Yoshida,
Japanese, CEO
of Yamashita
Company
How can Miss Kitty and Mr Yoshida solve their own problems? Are there any
difficulties involved?
1. Solution: Students may answer the question freely
E.g.: Miss Kitty can invest her money in Mr Yoshida’s company. His knowledge in running a
business can bring revenue to Miss Kitty.
2a. Difficulty: Students may answer the question freely
E.g.: Geographical and cultural factors, as well as language barriers make the problem mentioned in case
1 (e.g. not knowing each other, lack of trust and different expectations, etc) even more difficult to resolve.
2b. How can the above problems be solved?
Students may answer the question freely
2c. Assume
what is
 can help Miss Kitty and Mr Yoshida to solve the above problems,
?How can it help solve the problems?
Students may answer the question freely
E.g.: It is the stock market. Mr Yoshida raises capital by listing his company while Miss Kitty buys
the shares of Mr Yoshida’s company for investment.
E.g.: It is a bank. Miss Kitty saves her money at a fixed deposit and earns interest from the bank,
while the bank lends the money to Mr Yoshida to help him realise his plan.
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3. What role do you think does
 play in helping Miss Kitty and Mr Yoshida to
solve their problems?
An intermediary in financial activity
4. Source 1 mentions that transferring capital from one with surplus (i.e. savings) to
one that needs (i.e. investment) facilitates economic development and growth.
Illustrate the statement with reference to case 2 in activity 2.
Students may answer the question freely
E.g.: Miss Kitty uses her capital to buy shares of Mr Yoshida’s company and gains some revenue.
This may increase her consumption on some goods and services such as goods produced by Mr
Yoshida’s company that helps stimulate economic growth. On the other hand, Mr Yoshida uses the
capital raised in the stock market to expand his factory. During the expansion, he engages in
economic activities such as purchasing new machinery from other producers. With an exapnded
factory, Mr Yoshida’s company is also able to produce more goods for consumers like Miss Kitty.
These economic activities help promote economic development and growth.
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Activity 3
In 1980s, Hong Kong started to develop rapidly as an international financial centre.
A lot of financial activities similar to the cases in Activity 2 take place every day.
Source 2 helps us understand the factors that lead to the development of Hong Kong
as an international financial centre.
Source 2
To begin with, we have to understand the factors leading to the
development of Hong Kong as an international financial centre. As these
traditional factors are widely known, I am going to briefly introduce the
following 8 factors:
i） A well-developed legal system and an
independent judiciary hierarchy
ii）An abundant supply of quality workers
iii）A well-established regulatory system with proper standards
iv）A simple personal and corporate tax regime, featuring with low tax
rates
v）Government’s support to the development of the financial industry
vi）A freely exchangeable and stable currency
vii）A clean and efficient government
viii）A good working and living environment
These traditional factors are the cornerstones of an international financial
centre and thus are indispensable to Hong Kong. All of us should make
our best endeavours to preserve the advantages in order to stay ahead in
the competition…
Source: “如何鞏固香港的國際金融中心地位”. Speech by Mr. Joseph Yam Chi-kwong in
Hong Kong Economic Summit 2004, Information Services Department of the HKSAR
Government. http://www.info.gov.hk/gia/general/200312/16/1216092.htm
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Worksheet 1
Select 3 factors from Source 2 that you think are most important and explain how they
help develop Hong Kong as an international financial centre. Write down the
discussion result in the following table.
Factors
Explanations
E.g.: The properties and rights of all
E.g.: A well-established legal
system and independent judiciary
hierarchy
people in Hong Kong are protected
by law. The independent judiciary
hierarchy also ensures that all people
receive fair trial before law. This
helps boost the investors’ confidence
in Hong Kong.
Students may answer the question freely
Students may answer the question freely
We learn from Activity 3 about the factors leading to the development of Hong Kong as
an international financial centre.
In the 21st century, what are the strengths of Hong Kong to maintain its position as an
international financial centre? Is there any room for improvement?
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Activity 4
Source 3 lists 14 most important competitive factors for
financial centres. Complete Worksheet 2 by choosing 3 most
important factors from the list.
Source 3
The 14 most important competitive factors for financial centres
(1) availability of skilled personnel — availability of skilled talents and the flexibility of the labour market;
(2) regulatory environment — number of regulatory bodies, the philosophy, intensity and complexity of regulation;
(3) access to international financial markets —geographical proximity and business clusters;
(4) availability of business infrastructure — telecommunications, IT (information technology) infrastructure and
transport links;
(5) access to customers — the clientele base;
(6) a fair and just business environment — legal system, personal trustworthiness and temptations to break rules;
(7) government responsiveness — the level of support for financial services and government responsiveness to the
concern of the industry;
(8) corporate tax regime;
(9) operational costs —cost of employment, travel time, travel expenses, etc;
(10) access to suppliers of professional services — for example accountants and lawyers;
(11) quality of life — good work and life balance between work and life, leisure facilities and culture, healthcare
facilities, school and colleges, transport system and residential property;
(12) cultural and language — culture, cosmopolitan and accepting of people from other countries;
(13) quality and availability of commercial property — suitability of properties as offices; and
(14) personal tax regime — the personal tax rate.
Adapted from : “Hong Kong as a Leading Financial Centre in Asia”. SFC Quarterly Bulletin, Autumn
2006. http://www.sfc.hk/sfc/doc/EN/speeches/public/bulletin/sfc_bulletin/autumn06_feature3.pdf
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Worksheet 2
According to Source 3, choose 3 competitive factors which Hong Kong as an international financial centre has
an advantage. Also, give reasons for choosing them with support of an example, room for improvement and
suggestions for improvement.
Factors
1. Students may answer the
Reasons
Reason: Students may answer the question freely
Room for Improvement
1. Students may answer the
Reason: Students may answer the question freely
2.
Students may answer the
Students may answer the
Students may answer the question freely
question freely
question freely
3.
Students may answer the question freely
question freely
question freely
2. Students may answer the
Suggestions for improvement
Reason: Students may answer the question freely
3.
question freely
Students may answer the
question freely
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Students may answer the question freely
Extended
Activity
The development of financial services
industry in Hong Kong has been tremendous.
Being a world-renowned international financial
centre
has
brought
about
remarkable
achievement to the economic development of
Hong Kong. However, scholars point out that
disadvantaged social groups, such as the
elderly and the low-income groups, have not
been benefited much from recent economic development. On the contrary, their benefits
are sacrificed during the process. Banks closing branches recently is one of the issues that
arouse public concerns in such arena.
Closing of Bank Branches Affects Services
According to a survey carried out by the Consumer Council
at the end of last year, banks closing their branches has
hampered their service to some residents of public housing
estates. The Council points out that the number of bank
branches decreased by 17% in last five years, from 1400
branches in 2001 to 1200 last year. The survey also
reveals that few bank branches are found in districts such
as Sham Shui Po, Kwun Tong and Tin Shui Wai, which are
concentrated with low-income earners and old people.
Other banking facilities are also severely insufficient in these areas. For example, there is only
one JETCO ATM machine for more than 30,000 residents in So Uk Estate and Fu Cheong
Estate in Sham Shui Po.
Source: “銀行減分行被指影響服務”. Ming Pao Instant News, 29 March
2007http://www.mpinews.com/htm/INews/20070329/gb41228w.htm
“長者櫃員機冀減少輪候”. Sing Tao Daily, 29 March 2007
http://www.singtao.com/index_archieve.asp?d_str=20070329&htmlpage=main&news=0329ao08
.html
15
Activity 5
Referring to the opinions of the people below and using your own knowledge, complete
Part I of Worksheet 3.
Opinions of different people regarding the closing of bank branches
Banks face competitions from counterparts within
and outside the district. We try every means to
maintain
our
competitiveness
by
providing
diversified services and lowering operational
costs… However, we still have to close some
branches which do not bring good revenue to the
bank. We will install more ATM machines in the
Bank Manager
affected areas so that people can still enjoy our
service.
I need to go regularly to the bank
I arrive at the bank at about
to take my pension. It takes me
6 am and wait until the bank
almost 2 hours to get there and
opens… Last year when the
return home. Since the journey is
bank branches have not yet
long and there are too many
reduced, the waiting time was
people waiting for service, I take
about 10 minutes only. Now, it
my pension once a month….
is more than 1 hour. I hope
There are a lot of ATM machines
that the bank can provide
on the streets, but we old people
priority service to the elderly.
Retired Mr Ng and Mrs Ng
do not know how to use them.
So, I will keep going to the bank
to withdraw money.
16
Banks are more concerned with
profits than anything else. The
closure of bank branches has
ignored
the
needs
of
the
disadvantaged social groups. It is
an act of neglecting social
responsibility and business moral.
Legislative Councillor
The closing of bank branches is a result of commercial
competition. It is impossible to seek approval from the
public or the Legislative Council every time we open
or close a branch. This is not what we should expect in
a free economy and it does no good to Hong Kong as
an international financial centre….We are conducting
feasibility studies with some government departments,
such as Hongkong Post, and commercial organizations
to help solve the problems faced by the public. For
Spokesman of
Hong Kong Association of Banks
example, we are studying whether social security
assistance takers can withdraw money from the
supermarkets and other retail stores without making
any transaction, and whether they can take money with
their Octopus Cards at certain locations.
Banking service is a basic social need. We hope that
the banking industry can try its best to help the
public to solve their problems. We suggest banks to
study
the
possibility
of
using
some
other
identification methods, such as identification of iris
or fingerprints to facilitate the elderly and to reduce
the risk in using ATM machines. Banks may also
consider the possibility of establishing mobile banks
in areas where bank branches are closed.
Representative of the Consumer Council
17
Sources rewritten from:
“長者櫃員機冀減少輪候”. Sing Tao Daily. 29 March 2007
http://www.singtao.com/index_archive.asp?d_str=20070329&htmlpage=main&news=03
29ao08.html
“財經事務委員會討論銀行關閉分行對公眾影響”. ATV News. 3 July 2006
http://app.hkatvnews.com/v3/oldcontent.php?date=2006-07-03&news_id=91617
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Worksheet 3
I. Fill in the boxes with reference to the opinions of the people in Activity 3 and your
own knowledge.
Closing of bank branches
1. Reason:
Banks face keen competition. In order to reduce
operational cost and maintain competitiveness, they
need to close branches that do not bring much profit.
2. Problems generated / impacts:


The districts where banks closed their branches are often those
concentrated with low-income earners and old people. There are few
banks in the districts. Closing branches brings inconvenience to the
residents.
Although banks have increased the number of ATM machines for the
affected residents, it cannot help those who do not know how to use an
ATM machine, for example old people.
3. Solution:
If Hong Kong is to strike a balance between the public needs and corporate interests in the
process of economic development, I think…
Students may answer the question freely
Source of photo: “匯豐漠視弱勢社群需要
藍田關分行提款到觀塘”. Sing Pao Daily. 14
March 2005
19
II. With reference to Part I of worksheet 3 and your own views, write a letter to the editor
in response to the news clip “Bank branches closure affect services” on p.15 to reflect your
opinions. In the letter, you should include the reason(s) for the closure of bank branches,
its impacts and solutions to the problem.
Students may answer the question freely
20