Taiwan has a small and export-driven economy. Fortunately Taiwan economy and banking sector has been resilient and withstood the financial crisis in 2008. Currently the banking sector is safe and sound. The NPL ratio is lower than 1% and capital adequacy ratio has reached 11%. However the banking sector are struggling with low interest environment and overbanking. Under the Economic Cooperation Framework Agreement (ECFA), the FSC finished Early Harvest negotiations on financial services with mainland China and obtained more favorable treatment for domestic banks than that provided to foreign banks. This change could help Taiwanese banks develop into the market of Mainland China.
The Taiwanese banking institutions are able to expand their operations and enhance their profitability after ECFA was signed.