A Study On The Problem Of Financial Security In China Arose From The Foreign Capitals M & A In Banking

As the December 2006—the deadline for full liberalization of banking—is approaching,China has accelerated the pace of financial service open to the foreign capitals. On the onehand, the stated-owned commercial banks fasten the shareholding reform and IPO;on theother hand, the foreign financial institutions participate on a large scale in the Chinese-fundedbanks as strategic investors by shares, and make this way into an important means of accessto Chinese financial markets.The foreign capitals M & A in banking is an inevitable trend for the development of ourbanking, and it will increase the capital adequacy rate of Chinese-funded banks, improve thecorporate management structure, and strength the operational capacity for innovation andoperating as well as the efficiency of allocation of financial resources. However, it isundeniable that foreign capitals M & A in banking will bring various kinds of risk to ourfinancial security such as the shifting of our banks' control power, the intensification ofimbalances in development between regions, and so on. This point is particularly obvious inthe conditions of our fragile financial system.This paper analyzes the links between financial security and foreign capitals M & A inbanking, and emphasizes the factors which decide the degree that foreign capitals M & Aimpacted on a country's financial security on the basis of analyzing objectively both positiveand negative influences that foreign capitals M & A brought to the financial security. Andthen, the paper introduces the need to attract foreign investment in light of our financialsystem's characteristics, and analyzes the potential threat to our financial security in depth atthe same time. Finally, in order to protect our financial security, some measures are discussedon how to regulate and supervise foreign capitals M & A.The innovations in this paper are reflected primarily in the following two aspects: one isto explain the reasons why different kinds of countries' states of financial system and degreeof openness will cause different impact on a country's financial security arose from foreigncapitals M & A in banking;and the other is to reveal the latent threat to our country'sfinancial security when foreign capitals participate in Chinese-funded banks according to thestructural problems of our financial system.