Paper: arXiv 2511.10715

Authors: Christopher Mantzaris, Ajda Fošner

Abstract

Europe’s largest bank by assets as of 2025 started out in the 1860s in one of Europe’s colonies: The Hongkong and Shanghai Banking Co (HSBC). Multiple wars forced Qing China and later the young Republic of China into a series of unequal treaties, one of which was the forced legalisation of the opium trade from parts of the British Empire into China, another was opening several cities, including Shanghai, for trade and granting extensive civil, property and business rights to non-residents and yet another was the annexation of Hong Kong by the United Kingdom. These are the conditions that created HSBC and in which it thrived, including from opium-related profits. During periods of relative calm, the bank grew geographically and made profits – whether in moral or unethical, whether in legal or unlawful ways – which helped HSBC weather the storms of civil and world wars. Other aspects contributed to HSBC’s survival and success, such as its global nature, which allowed it to diversify and shift away from regions when danger emerges there and find shelter in safer havens. Yet the resilient survival abilities and the financial success of HSBC until 1950 should not distract from the fact that in addition to its tainted cradle and early profits from facilitating the poisoning of a whole society, its human resource system was also discrimination based, attempting to divide the one human race into different groups – in spite of such practises being opposed to medical and biological facts. What is particularly interesting to see is that not only has HSBC yet to apologise for the early drug-related blood money it made: it even fails to mention its colonial, drug profits tainted past on any of its many history-themed pages sighted. Later sections contain possible reasons for HSBC’s resilience and success, particularly interesting for entrepreneurs.

Complexity vs Empirical Score

  • Math Complexity: 0.5/10
  • Empirical Rigor: 1.5/10
  • Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: This paper is a historical case study and qualitative business/corporate history analysis rather than a quantitative finance paper. It lacks quantitative modeling, empirical backtests, or financial data rigor, focusing instead on HSBC’s colonial history and ethical considerations.

Research Flowchart

  flowchart TD
    A[Research Goal: Analyze HSBC's historical resilience, growth, and ethical practices up to 1950] --> B[Historical & Archival Methodology]
    B --> C[Data Inputs: Historical records, treaties, corporate archives, and literature]
    C --> D[Synthesis & Contextual Analysis: Evaluate colonial trade, wars, and corporate policies]
    D --> E[Outcome 1: HSBC thrived via colonial treaties, opium trade profits, and geographic diversification]
    D --> F[Outcome 2: Success was aided by discriminatory HR policies and whitewashing its colonial history]