The Evolution of the Banking System in Lebanon 1943–1975 Historical Study

Abstract

This research investigates the evolutionary trajectory of the Lebanese banking system, spanning from the post-independence era of 1943 to the onset of the civil war in 1975. This timeframe represents a foundational epoch during which the Lebanese economy’s quintessential features emerged—characterized by a liberal, service-oriented model that remained highly receptive to both regional Arab and international capital. The significance of this period lies in the formalization of the banking sector's institutional framework, establishing it as a cornerstone of the national economy.                                                                                                                                    

Methodologically, the study adopts a historical-analytical approach, synthesizing a dual analysis of legal-financial frameworks—notably the 1956 Banking Secrecy Law and the regulatory statutes governing the Central Bank of Lebanon and commercial entities—with a rigorous examination of macroeconomic indicators. These indicators include the proliferation of banking institutions, deposit volumes, credit allocation, and the sector's strategic role in facilitating trade and services. The study is structured into two primary thematic pillars: the first traces the nascent stages of banking under the French Mandate and early independence, while the second scrutinizes banking dynamics from the 1963 establishment of the Central Bank until 1975.                                                                              

The findings demonstrate that while the 1943–1975 period facilitated the transition of the Lebanese financial landscape from a rudimentary network into a sophisticated, globally integrated sector, it simultaneously embedded profound structural vulnerabilities. These weaknesses, exacerbated by the absence of comprehensive economic planning, an over-reliance on foreign capital flow, and deficient risk oversight mechanisms, laid the groundwork for subsequent financial crises. Ultimately, the research argues that a critical re-reading of this historical phase is indispensable for identifying the genealogical roots of the imbalances currently afflicting the contemporary Lebanese economy.