Banking crisis and reform: the case of Jamaica

Abstract

PurposeThe aim of this paper was to trace the development of the banking sector from post independence (1962) Jamaica to 2002 when the last major revisions were made to banking legislation.Design/methodology/approachThe paper focuses mainly on the banking crisis that the financial sector suffered from 1992 to 1997. It examines the legislative and regulatory framework that existed during that period and the shortcomings that the financial crisis revealed. The impact of the financial crisis on the development of the legislative and regulatory framework and the resultant changes are also examined. The paper provides a comprehensive analysis of the regulatory and legislative framework existing in the banking sector in Jamaica. Investigative research was done through interviews, newspaper articles and reviewing papers written on this area in conjunction with the analysis of the banking legislation during this period.FindingsThe present banking and regulatory framework in Jamaica developed in response to the financial crisis and not in a structured and planned way. This conclusion is drawn from the fact that there were three amendments to the banking legislation in five years crisis primarily to close the loopholes and weaknesses the financial crisis revealed that the regulators did not have the legislative power to remedy.Originality/valueWhile papers have been written examining the financial crisis from an economic perspective this paper provides a comprehensive legal analysis of the banking and regulatory framework in Jamaica. This paper will be of interest to regulators and the legal community.