Research On The Effect Of Foreign Banks In Emerging Market Countries

In recent years, with many foreign banks entering the emerging market countries, the related theory concerning foreign banks entering the emerging market countries receives great attention from many economists and financial experts. When WTO transitional period is over, China is in a stage of fully opening to the world, it's quite important and pressing for us to make some researches on the subject.The dissertation starts from analysing the basic characterists of the foreign banks in the emerging market and on the basis of credit availability, credit products price, financial stability and financial soverignty the dissertation studies the function effect of foreign banks entering the emerging market countries. On the basis of these theoretical researches, the dissertation seeks for policies and measures to perfect the function of foreign banks in the emerging market countries.The dissertation consits of 6 chapters. Chapter 1 describes the basic characteristis of emerging market countries and lies the bases for Chapter 2 and 3. Chapter 2 and Chapter 3 analyze theoretically the function effect of foreign banks entering the emerging market countries. Chapter 2 analyzes the possible effects on the credit amount and the price of credit products after foreign banks enter the emerging market countries. Chapter 3 theoretically analyzes the foreign banks function from the point of financial stability and state safety. These two chapters form some basic principles and measures. Chapter 4 evaluates the actual function effects from the overall level and individual country level. Chapter 5 and Chapter 6 discuss what proper policies should be adopted. Chapter 6 specially stresses China, as a big country, must guarantee the governing position of home banks.The main results and contribution of the dissertation are the following:1. The foreign banks in the emerging market countries have the characteristics different from these of home banks, including the capital characteristics of capital integration and seperation that can make foreign banks more flexible but may introduce new risks, the non-indpendent and the efficient advantage in the operation process, the limit of credit market entry, the dependence upon the information and more international businesses involved. 2. The dissertation analyzes the foreign banks entry effects upon the credit availability and the credit product price in the emerging market countries. The results show that it improves the economic development and bonus level and sometimes it leads to the decrease of credit availability and the increase of credit product price. These all depend upon the significant degree of foreign banks's effcient advantage, the business capability of foreign banks and home banks, different market size in the different market part and the fixed costs level for different banks.3. The dissertation concludes that foreign banks entry may increase the financial market competition and lead to the decrease of financial system stability. Foreign banks have the path for outside risks transmitting into the home country. The business strategy and business types may lead to new instability. While at the same time foreign banks's strength and the"harbour"function of foreign banks can lift the financial stability of the emerging market countries.4. The dissertation concludes that when foreign banks enter the emerging market countries in a great number and take a governing position, they will affect the financial soverignty and have bad effects upon the economic development in the emerging market countries. This issue is of great importance to the big emerging market countries and of less importance to the small opening countries.5. The dissertation analyzes the relative policies and measures in the emerging market countries. The key points lie in the strenthening of foreign banks entry management, operation supervision, market decipline and perfection of the overall operation environment.6. The dissertation concludes that in such a big emerging market as China, we must adhere to the governing position in the financial system of China. This is the prerequisits for Chinese economy to remain independence, integraty to realize the goal of self development. The author stresses that China must take proper measures to realize the function positioning of foreign banks, must stop the improper financial opening to the foreign banks in taking shares in the home banks.