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A Case Study of Banks in Fiji

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A CASE STUDY ON BANKS IN FIJI

COMPILED BY: SHINAL PRIYANKA CHAND

1 INTRODUCTION
Fiji has a well developed financial system that not only is secure and sound but has remained flexible despite the recent global financial crisis. The strong involvement of the banking industry to the Fiji Financial System has been a major factor in this regard. Over the years the Banks have invested heavily in Fiji and have remained committed to delivering services that have helped shape and develop our country into what it is today.

At the end of 2010 the commercial bank’s assets alone was approximately 42% of the entire financial system and this highlights the importance of this industry in the local economy. The value of total assets of the commercial banks at the end of 2010 was $4.5b and equates to around 75% of GDP.

Commercial banks are financial institutions that primarily intermediate between the savers and the borrowers in an economy. They also buy and sell foreign currencies and facilitate trade and the transfer of payments both domestically and across international borders. It is these very transactions that help to pay for our salaries, the importation of goods and services that we use almost every day, and provide the much needed capital for investment. At the end of 2010, the total loan book value of all banks stood at $3.1b and this has grown by 159% over the last 10 years.

Furthermore, Commercial banks play an important role in the transmission of monetary policy in Fiji. Over the last two years, the Reserve Bank has focused its policy on creating an economic environment that is conducive to investment and growth. To this effect, the overnight policy rate has been reduced further to 1.5 percent and a passive approach to liquidity management was adopted. As a result, it is anticipated that commercial banks

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