Research On The Impacts Of Foreign Banks Entry On The Efficiency Of Domestic Banking In China

In view of the problem about the affect to the host country's banking of foreign banks entry. The domestic and foreign scholars have carried on the considerable amount theory and empirical studies related foreign bank competition which affects to the host country banking industry. Come to the conclusion that the entry of foreign banks can improve their operational efficiency of the host country. Promote its business through a variety of financial innovation to improve competitiveness.The entry of foreign banks has advantages and disadvantages. Considering the actual case of China, on the one hand, the entry of foreign banks will facilitate the reform of domestic commercial banks'system, improve the management level of domestic commercial banks, Accelerate Chinese financial innovation and Conducive international competitiveness of Chinese banks. On the other hand, compared with the Bank of China, foreign banks have more solid strength, in terms of management, asset quality, human resources and product innovation capabilities so absolute advantage. The entry of foreign banks makes commercial banks face more severe challenges and enormous pressures, at the same time, the stability of domestic banks have been challenges.In this paper, we use exceed the efficiency model of the technical panel data envelopment furniture representative of 14 domestic commercial banks to operate efficiency measure comparing changes in the efficiency of the WTO before. The results showed that the entry of foreign banks to improve the efficiency of the domestic commercial banking industry, but not to raise rates, impact is not very significant. Then through empirical analysis, a thorough inspection of foreign banks into Chinese commercial banking sector profitability, operating cost efficiency, mobility and ability to resist risks and other aspects of the analysis, I will sample the state-owned banks and joint-stock commercial banks. Banks and samples were inspected and all its empirical results show that foreign banks entry to improve the profitability and reduce liquidity, increased risk of the domestic banks. Moreover, as joint-stock commercial banks than the state-owned banks, a flexible mechanism, the burden small, strong ability to innovate, foreign banks to enter the overflow, the demonstration effect in joint-stock commercial banks have better reflected.Accordingly, this paper proposes the corresponding countermeasures which deal with foreign banks entry. To enhance the competitiveness of the domestic commercial banking industry, first of all, do the reform of domestic commercial banks. To create a fair and orderly competition in the domestic banking environment, increase domestic banking innovations, strengthen supervision of foreign financial institutions, improve the legal system for the monitoring of foreign banks and deal correctly with the relationship between Chinese and foreign banks.