Research On The Entry Mode Of Foreign Banks Into China

Since 1980s, the process of financial globalization has been accelerated, and the fact that foreign banks enter the emerging market has become one of its important contents. After being member of World Trade Organization in 2001, China has promised to open banking industry, so foreign banks grow vigorously here. As banking industry plays a crucial role in national economy, the entry of foreign banks into China will certainly bring about profound impact to the whole social economy and national welfare, as well as development opportunities to the Chinese banking industry. However, we should fully aware of the fact that after opening the whole domestic markets, foreign banks who have the equal citizen treatment with internal banks, will pose great challenges to our banking industry.The entry modes of foreign banks into China consist essentially of greenfield investment and merger & acquisition. Different entry modes have different effects to our banking industry. Many factors should be considered when foreign banks select their entry mode into China; moreover, there are many differences between greenfield investment and M&A, e.g., the threshold for entry of target market, the entering speed into target market, invested cost and forms of investment, business expansion, risk control, etc. Therefore, it is highly necessary to do some research on the influence factors during the selection of entry mode of foreign banks into China. Accordingly, we could take positive measures, improve innovation of domestic banking industry, and accomplish the purposes of improving banking system and perfecting financial system, as well as bringing in funds, technique and competition.The thesis combines the survey of greenfield investment and M&A in China, analyses comparatively two entry modes of foreign banks into China, and discusses the positive and negative aspects of the impact of different entry modes. It makes empirical analysis on the influence factors with our macro economy and banking industry data in terms of econometric model based on sample bank, and makes a conclusion. Finally, the paper proposes remedial measures in view of different entry modes of foreign banks into China.