Research On The Openness Of Banking And Financial Security In China

In the tide of economic and financial globalization, if any country wants to share the income of economy development and cooperation in the world, she must integrate into the economic globalization progress. From the end of70’s in20th century China begun promoting reform to open, and the degree of openness in whole national economy continuously increased:the region of open extended to the hinterland from the coast, and the industry of open expanded to the financial realm from the real economy. In December,2001, China formally joins the World Trade Organization (WTO); In December,2006, China canceled the restriction to region and customer’s for foreign banks to deal in Renminbi business. Till then, the scope and depth of openness in China’ banking industry reached an unprecedented level. After opening, the foreign banks brought a lot of opportunities and challenges for the development of China banking. Have the foreign banks strengthened the banking stability of China? Have they improved the efficiency of China banking? Have they weakened the control right of China banking? Then have they endangered the financial security of China? All these questions must be explicitly answered.Based on measuring the degree of openness in China banking industry, this dissertation systematically evaluated the effects to China’s banking stability, banking efficiency and control right, which has been brought by foreign banks, and used the theoretical model of financial security comprehensive evaluation and the new view of financial security to comprehensively analyze whether these changes will endanger China’s finance security? It is composed of five parts, and the concrete content of every part is as follows:The first part introduces the issues which to be studied, and summarizes the existing literature, it consists of prologue and chapter two. Prologue introduces the issues which to be studied, the theoretical and realistic meaning, the frame, analysis method and innovations of the research. Chapter two summarizes the existing literature, and points out the viewing angle of this dissertation, which provides a logic departure point for research.The second part focuses on theories analysis, including chapter three. Under the open economy, the foreign banks will make significant influences on banking stability, banking efficiency and control right of host country, and then give important influence to financial security of the host country. Based on the mechanism design theory, this part sets up a theories model to comprehensively evaluate the influence to the host country financial security brought by foreign banks, and it forms a basic analysis frame of this dissertation.The third part is case and experiential analysis, comprising chapter four to eight, and it is the core of the dissertation. Chapter four measures the degree of the scope and depth of openness in China’s banking industry, and provides background foundation for other three chapters. Chapter five uses case analysis method to investigate the influences to host countries’ banking stability brought by foreign banks during the financial crisis in Latin America, East Asia, Russia, Central and Eastern Europe in1990’s, and makes use of the Logit model to analyze the influence to host countries’ banking stability brought by foreign banks. Chapter six firstly uses the financial industry efficiency valuation frame issued by the Ministry of Finance of China to evaluate the efficiency of the commercial bank from2007to2012, secondly uses Data Envelopment Analysis (DEA) technique to systematically evaluate the efficiency of the commercial bank, and then makes use of the Tobit model to analyze the determinant factors of bank efficiency in open economy. Chapter seven uses principal component analysis (PCA) method to study the influence to host countries’ banking control right brought by foreign banks.The fourth part is chapter eight, and it gives some comprehensive analysis. Based on the foregoing analysis, this part estimates China’s financial safe index by experiential analysis, studies it’s determinants, and uses a financial security compre- hendsive evaluation theoretical model and the new view of financial security to comprehendsively evaluate the influence to China’s financial security brought by foreign banks during the post banking-open time.The final part summarizes the whole dissertation briefly, and brings up some political suggestion.Through the research, this dissertation draws some conclusions as following:Firstly, in the whole, the degree of the scope and depth of openness in China’ banking industry increases steadily and it’s not symmetrical.Secondly, there are two different effects (i.e. positive and negative) to host countries’banking stability which brought by the foreign banks. The cases analyses indicate the influences to host countries’ banking stability brought by foreign banks during the financial crisis in Latin America, East Asia, Russia, Central and Eastern Europe in1990’s are beneficial. But to China, foreign banks’ entrance is beneficial to enhance the banking stability.Thirdly, this paper uses the financial industry efficiency valuation frame issued by the Ministry of Finance of China to evaluate the efficiency of the commercial bank from2007to2012, and the results show that the efficiency is placed in "good" on the whole, approaching "excellent". The DEA analysis indicate the technique efficiency of China commercial bank is high, the scale efficiency descends slowly, the allocation efficiency promotes significantly, and the cost efficiency is the smallest one in the four. In addition, the Tobit model discovers that the determinant factors of bank efficiency is the profitability, the vitality of the main business, potential growing, the quality of assets, and the adequacy of capital etc., and the scale and share of market, the ability of capital appreciation of state-owned capital and the provision coverage level has not significant influences.Fourthly, the control right of China’s banking improves continuously during the post banking-open time. Fifthly, the financial security comprehensive evaluation theoretical model shows that increasing the degree of openness in China’s banking industry strengthens the banking stability, improves the efficiency and control right of China’s banking, and doesn’t endanger the financial security of China during the post banking-open time. The estimated results show that China’s financial safe index goes up from2001to2011and the stability, efficiency and control of China’s banks give a positive effect on it. From the new view of financial security angle, there are not enough evidences to support the judgment that foreign banks can threaten the financial security of China during the post banking-open time.