This thesis examines three themes that focus on inter-banking connections and their impact on modern banking development in the 1930s. Chapter 2 provides an overview of the modern bank sector and highlights the inter-banking relations. Tracing the shape, structure, and development of links within the sector, I find that it was characterized by a strong network of interlocking directorates. This network shows a dominating central cluster, indicating that the sector was characterized by internal cooperation rather than competition. Similarly, new entrants were usually linked to existing banks, indicating that entry was driven by the expansion of existing banks rather than the rise of new competition. Finally, central locations of public banks within the cluster indicate that the government gained influence over the sector through direct bank ownership. Chapter 3 investigates how board connections in an inter-bank network affect their corporate policy decisions. I find evidence that corporate decisions of banks are influenced by their social peers — the more directors two banks share with each other, the more similar are their corporate strategies. Also, banks with a central position in the boardroom network make corporate decisions less distinctively. Additionally, the empirical outcomes show that co-moved corporate policies are mainly driven by banks’ intentions to pursue profits and eliminate risks, known as profitability and insurance effects. I further examine whether inter-banking connections based on interlocking directorates contributed to the overall performance in Chapter 4 . I find characteristics of banks, which share directors with other banks, are significantly different compared to those of unconnected counterparts. The empirical results elucidate a high positive correlation between banks’ profitability and their connections with rivals through interlocking directors. Last but not least, Chapter 5 investigates the development of the interlocking directorate network between domestic Chinese banks from 1933 to 1936 to understand how financial institutions structure cooperation within the sector in response to uncertain external environments and weak property rights. This part uses a dynamic network simulation approach to address the reflection problem between bank performance and network formation, illuminating the factors driving the network evolution and shaping the structure of cooperation between Chinese banks.Thesis (Ph.D.) -- University of Adelaide, School of Economics, 201
