Exploring the impact of banking industry regulations on the economy of brunei darussalam

This study uses a combination of archival and documentary research, as well as quantitative analysis, to uncover the evolution and impact of banking regulations on the economy of Brunei Darussalam. Available evidence suggests that throughout most of the 20th century, regulators adopted a laissez-faire approach with minimal regulations in the banking industry. However, financial crises tend to trigger regulatory reforms. Growing household indebtedness and bankruptcies were precursors to the introduction of major institutional changes, including the establishment of a centralized monetary and financial regulatory authority, Autoriti Monetari Brunei Darussalam in 2011 (later renamed the Brunei Darussalam Central Bank (BDCB) in 2021), the Brunei Darussalam Protection Corporation in 2011, as well the Credit Bureau in 2012. Various financial regulations covering personal credit/financing, interest rates, credit card usage, and the Total Debt Service Ratio (TDSR) requirements have been introduced to promote financial stability and consumer financial protection. This has coincided with an evident decline in private and household indebtedness as well as non-performing loans/financing among banks. However, promoting financial stability and supporting economic growth can be a tricky balancing act for regulators to navigate. This study finds that the lack of local investment opportunities limits the possibility for surplus funds to circulate in the economy. In terms of policy recommendations, the role of financial regulations is discussed in the context of addressing global challenges such as inequality and climate change.