Banking Internationalization: Evolution, Modes And Effects

Since the 1970s the three trends experienced by the international banking provide the Banking Internationalization the foundation of financial system and the technical, and the development of financial globalization provide a sufficient foundation of financial practice. On the one hand, these trends are forcing banks to increase its efficiency, the efficiency of the banks to improve their implementation of the tendency of international strategy; the other hand, these trends have severely weakened the bank's profitability and enhance risk preference of banks, which has the potential to become the banking system one of the factors of instability.So let the behavior of banking internationalization model as a starting point, and let the historical evolution of banking internationalization and development trend as base, this paper focus on the evolution, modes and effects of banking internationalization. Through theoretical analysis and practical conclusion, the paper proposed that the main analysis target of banking internationalization are multinational banks, financial and technology foundations directly affect and change the bank's international behavior, and these behavioral changes consequently affect the financial stability of the dynamic evolution mechanism and system stability conditions and its effects on the financial stability.Models of this paper are mainly the local analysis and inter-temporal analysis. The modes of banking internationalization is mainly local analysis, including those based on profit-maximizing use of comparative static analysis, Bayesian belief updating mechanism and methods of game theory; effects on the financial stability is mainly inter-temporal analysis, including those based on indefinitely inter-temporal and with overlapping structure of two period inter-temporal analysis.In view of the efficiency of heterogeneity is important in the bank's behavior international empirical analysis, this paper use Bayesian SFA to estimate 209 Bank of China's efficiency, and compare the efficiency of different modes'relationship with the bank shares the experience of international, in which the Bayesian prior probability is estimated by the efficiency of 8227 banks from BankScope database. Several key conclusions of this paper include:the efficiency heterogeneity plays an important role in the banking internationalization; the several trends of international banking experience seriously weakened the bank's profitability; banks for short-term dynamic evolution of mechanisms for performance and prosperity, the medium-term crisis and long-term stability; Under certain conditions, endogenous fluctuations caused by continuous fluctuations in the banking system is convergent. Example of the European money market integration, the above conclusions we can draw a policy implication, that too strict or too loose regulatory policies are not necessarily appropriate, encourage banks to reduce their own risk preference is the starting point of mechanism design.