Commercial Banks In China To Introduce Foreign Strategic Investors

In recent years, many China's commercial banks introduce foreign strategic investors. China's nationwide commercial banks, in addition to China Merchants Bank, have introduced foreign strategic investors. In the 14 banks listed in the stock market 13 banks have introduced foreign strategic investors. For the impact of the introduction of foreign strategic investors to China's commercial banks, there were different voices in the China's theoretical and practical circles. Some people think that only the introduction of foreign strategic investors can improve the competitiveness of China's banking industry. While others argued that the low efficiency of China's banks is formed in their own long-term, not only the introduction of one or two foreign investors will be able to solve, and therefore the introduction is not doing anything. Topics of this thesis are based on this background. Starting the macro background of the reform of China's financial industry, in the light of the development clues of the introduction of foreign strategic investors banks in our country the development of strategic investors for clues the paper analyzed many involved fields.This dissertation is consisted of six parts.Firstly, this paper analyzes the basis of introduce foreign strategic investors. The path of the economic development of countries in transition is analyzed, involving the pattern of radical reform and gradual reform. Next topic of the study is the general pattern of economic development of developing countries. From import alternative development model to the export -oriented, and finally settled on the financial liberalization. Thesis then briefly reviewed the past 30 years of our country's economic reform and financial reform process, and clarify the financial reform and opening in our country has followed a gradual approach. Then this article undertakes the comparative analysis of the financial opening in developed and developing countries. With briefly analyzing the relevant theory of financial openness, the paper uses a model to prove the gradual opening of the banking industry is the best selection.In the next chapter, this paper studies the reason that the banks want to introduce foreign strategic investors. From the lessons of previous banking reforms, the banks need to enhance the level of corporate governance and risk management, and it is feasible to introduce foreign strategic investors.The introduction of foreign strategic investors in China's banking reform is very important, and it first encountered problem is what price the banks' shares sell. This article first review the relevant asset pricing theory and assessment methods, and through using a model prove that foreign strategic investors only paid for the market value of existing assets, not including the value of the future synergy effect. It can be think that China's banks paid the strategic foreign investors for the support terms of protocol commitment. The supervision to fulfill the terms is strongly supported by the payment. This article then focuses on the so-called topic that state-owned assets sold cheaply. There are five main determinant factors to decide the banks assets price, including the value of the synergies of cooperation, the amount of exclusivity clauses in cooperation agreement, the number of foreign investors in line with the requirements, the search intensity of domestic banks, and the general price level of domestic M&A market.In chapter 5, the thesis reasons the way to improve the performance of commercial banks through using model. The event study and the factor analysis then are used to make the empirical analysis of the introduction of foreign strategic investors. And the conclusion is that the foreign strategic investors play the positive role in Chinese banks reform.This article takes the combination method of macro-study and micro-study, not only attach importance to the macro-background analysis of the introduction of foreign strategic investors, but also to micro-behavior of commercial banks. At the same time the paper adhere to the theoretical research and empirical analysis, and make it always run through the thesis.The primary conclusions are: (1) Gradual opening pattern of China's banking industry is the best selection. In this paper, on the basis of the past literatures we through using model do an in-depth research for the best selection to the opening of China's banking industry. Studies have shown that the shareholders' best choice is the pattern of gradual acquisition when the state-owned share yield can increase with the process of the acquisition of foreign capital, at the same time the marginal revenue of acquisition is greater than marginal cost.(2) The price discount for domestic banks shares is the payment for strategic collaboration to foreign strategic investors. Based on the relevant asset pricing theory and assessment methods, combining with the characteristics of China's commercial banks, the M&A model is made to analyze the pricing issue about which China's commercial banks sell their shares. Studies have shown that the price that China's banks sell shares does not include future synergy, which as the payment of domestic banks for the strategic collaboration.(3) Through introducing foreign strategic investors, China's banks enhance the performance level. Basing existing literature the paper establishs a model for a in-depth study about the affect factors to the performance of Chinese banks. Then using the method of the event study and the factor analysis, the paper makes the empirical testing to bank performance. At the end to introduce foreign strategic investors can upgrade the level of the bank's performance.