A Study Of The Motivation Of Foreign Banks Investment In China

For more than ten years tough negotiation, China in the end entered into WTO in 2001. After the WTO entry, Chinese financial service industry would get the most shock among all industries. Up to Oct.2005,there had been 173 banks from 40 countries or regions setting up 238 representative offices in 23 Chinese cities, 24 representative offices more than those of before WTO entry; there had been 71 foreign banks from 20 countries or regions setting up 238 business bodies in 23 Chinese cities,43 business bodies more than those of before WTO entry, among which,181being foreign branches and 14 being corporations. The whole assets of foreign banks reached to 84.5 billion U.S dollar, which accounted for about 2% of our country's banking assets. Encountering for such a situation, it is necessary for us to study the motivation of foreign banks investment in China. It is helpful for the Chinese banks to get to know the motivation of foreign banks investment in China and to take counter measures in the competition with foreign banks.In this dissertation the motivation of foreign banks investment in China is studied carefully. Beginning with the theory model, the dissertation discusses the factors affecting the multinational banks investing abroad. Then it sets up an econometric model to test the factors, and proves the fact that area distribution of foreign enterprises and foreign banks highly tally either from static aspect or dynamic aspect. Combining the result with realistic case analysis, it gets backup for the demonstration. The dissertation is made of four main parts. Firstly, it reviews the literature on foreign banks investing in the host countries; secondly, it analyses the history, current state and the development characteristics of the foreign banks investment in China; thirdly, it studies empirically the motivation of foreign banks investment in China and supports the result with case analysis; fourthly, it puts forward counter measures for the Chinese banks to compete with foreign banks in scrambling for high quality customers.