A Study On The Effects Of Foreign Bank Entry On Chinese Banking And The Countermeasures

Generally, the entry of foreign banks can wake local banks up from their peaceful life, force them to improve their operation efficiency, and promote them to strengthen competitive ability by means of various methods. As to our country foreign banks'entry, on one hand, can break the situation of monopoly, facilitate the development of domestic financial market, introduce advanced technology, increase management ,heighten operation levels and strengthen international competitiveness of Chinese banks. On the other hand, it will challenge and lash Chinese banking industry seriously. Following the wide-opening of our banking industry, the competitiveness between foreign and domestic banks will get furious increasingly. If Chinese banks can not deal with it appropriately, it will badly affect the stability and development of our financial market. So, the purpose of this article is to have a good study on the degree of foreign banks'effectiveness on Chinese banking industry to use for reference for domestic banks and regulator.In chapter one, this article look backward the experience of the foreign bank entering China. Then the article analyzes the new situation of the foreign bank opening business. It will be that foreign banks'broad participation as shareholders, concentration of institutions'position, financial innovation, development of big customers and serious competition of hr with Chinese banks are new strategies of foreign banks'development.Chapter two analyses the impact on the performance of domestic bans'of foreign banks'entrance. In this part, first the article discusses the impacts theoretically, and then through an empirical analysis, the paper looks into the impacts of the entry of foreign banks on the profitability, efficiency, anti-risk ability of domestic bank industry. The empirical analysis shows significant relationship between foreign bank entrance and domestic bank performances. But the foreign entry's impact on domestic banks'profitability and interest spread is contrary to our hypothesis.In the last chapter, based on the analysis of characteristics of the development of foreign banks in China and the consequences following, the paper then tries to provide some advice accordingly. To deal with the challenge, Chinese banks must improve competitiveness. It is also necessary for the government to strengthen monitoring intensity on foreign banks and create a more comfortable environment for domestic banks.