Study On Impact Of Foreign Bank Entry On The Efficiency Of Chinese Banking

With the integration of economy and globalization of finance, the entry of foreign banks into host country will necessarily have significant effect on the economic function and financial system. Among which the most direct and important one is the impact on the efficiency of domestic banking. In recent years, with the reform of financial system and the complete open of banking to foreign competitors in China, it is an important task to analyze the impact of foreign bank entry on the efficiency of Chinese banking and put forward effective countermeasures.In this paper, the author starts research with the forms of foreign bank entry, summarizes the status of foreign bank entry before China's join in WTO and after, and generalizes the character and motivation of foreign bank entry. Then, the author analyses the positive and negative impact of foreign bank entry on the efficiency of domestic banking in theory, and discusses some factors that influence this impact respectively.Then the author emphasizes to make quantitative research on the impact of foreign entry on the efficiency of Chinese domestic banking, and introduces such two variables as banking development level and bank competition status of host country into the model created by Claessense(2001), to evaluate how these factors influence the impact of foreign bank entry. The results show that foreign bank entry reduces the efficiency of Chinese banking, instead of improving the efficiency of Chinese banking as we estimated, and we find that the impact of foreign bank entry on the efficiency of Chinese banking has closely related to Chinese banking development level and domestic bank competition status. With the improvement of Chinese banking development level and bank competition status, foreign bank entry will absolutely accelerate the efficiency of Chinese banking. According to the result, the author finally brings forward some effective countermeasures to foreign bank entry, including perfecting the import and supervision of foreign bank, strengthening the competitive ability of Chinese banking, promoting banking internal openness and enhancing the construction of banking system environment.