APEC countries have adopted a set of "competition principles" designed to a
pply to all industries, including the financial services industry. However,
a successful financial market must be sound as well as competitive. We exa
mine the tension between the principles of soundness and competitiveness wi
thin the financial services sector to ascertain whether APEC competition pr
inciples can be applied to the financial sector. We conclude, with referenc
e both to theory and to empirical example, that the principles can be appli
ed but certain regulatory practices particularly those barring new entry an
d the state direction of bank's business activities will have to be amended
. (C) 2001 Elsevier Science B.V. All rights reserved.