Research On Location Choice And Entry Mode Of Chinese Banking ODI

In 2006, CBRC (China Banking Regulatory Commission) proposed the policy of encouraging Chinese commercial banks to go out which was a support for Chinese commercial banks to develop overseas businesses. Under the background, our finance industry has led an important role in outward foreign direct investment since 2007. However, comparing with foreign banks our banks is still very weaker in the degree of internationalization and the main reason is that our banks don't apply the strategy of internationalization very early. In the aspect of international competitiveness, Bank of China who has the highest degree of internationalization among Chinese commercial banks cannot catch up with the international banks such as HSBC and Citibank. To speed up the internationalization of our banks, first we should study where our banks will invest or build branches. Second, we must analyze how to choose entry mode appropriately between M&A and Greenfield Investment.First, the paper introduces the ODI development on the whole to know the direction and trend of our ODI. Second, the paper studies the location choice of banking ODI on the basis of the basic development and location distribution of banking ODI. This part proposes some hypothesizes which are based on existing investment theories, makes index quantification and verifies hypothesizes by building regression model. Last, the paper takes HSBC for example to analyze the entry mode that international banking ODI mainly use and takes Bank of China for example to analyze the entry mode that domestic banking ODI mainly apply. Then the paper integrates the verification result of location choice to investigate which entry mode different locations should choose. What's more, the paper also proposes some advises about domestic banking ODI to quicken the internationalization.