Prelude – The Early Stage of Private Banking Industries in Taiwan
After the signing of the Treaty of Shimonoseki (1895), Taiwan experienced fifty years of Japanese colonial rule. Under the “Taiwan bank law”, passed by the Japanese Parliament in 1897, Bank of Taiwan was established in 1899 and was given the authority to issue currency. With the financial development, Taiwanese and Japanese people began to raise capital for banking, which led to the founding of Savings Bank of Taiwan. It was the first local private bank in Taiwan and the first example of the drive towards the privatization of financial industry in Taiwan over the past century. With the growth of the financial environment, an increasing number of Taiwanese people joined the fund raising trend for private banks. Chia-I Bank was established in 1905 on the capital loan from “Primary Tenant’s Compensation Bonds”. Then, in 1910, Commercial and Industrial Bank of Taiwan was founded to stimulate the industrial development of the central and southern regions of Taiwan. In 1916, Hsin-Kao Bank opened one branch after another to finance the tea industry.
In the mid to late 1900s, the rapid development of Taiwan’s industry led to an increasing demand for funds, which required organized financing and lending from financial institutions. The operation of the banks reflected the economic environment and its regulations. Thus, in 1912, in response to the rapid changes in the financial market, Commercial and Industrial Bank of Taiwan merged with Savings Bank of Taiwan in order to increase capital and modernize the business. The merger created the largest private bank in Taiwan at the time. After the First World War, Japan experienced serious financial panic in 1920. In 1923, in an attempt to stabilize financial development, Commercial and Industrial Bank of Taiwan merged with the poorly managed Hsin-Kao Bank and Chia-I bank, signaling the beginning of a new chapter in the post-war financial history of Taiwan.
