The Effect Of The Entrance Of Foreign Capital Banks Based On Panel Data Model

Foreign capital banks have been developing in China since 1979,when the first foreign bank set up the representative offices.During the twenty-eight years, the scale of foreign banks has increased by 34%comparing with the number before entering the WTO,both the total assets and the balance of loans have doubled, and the total depositshas increased by 244%.The entrance of large scale of foreign banks is a double-edged sword for banking sector of China.Therefore, researching on the effect of the entrance of foreign capital banks has an important practical significance to the stable operation of China's banking sector.First,this paper analyses the motivation of multinational management in the banking sector using an abstract model.And try to explain why host country may open the banking market from the perspective of social welfare.Second,this paper describes the development process of foreign banks in a simple order,and summarizes some characteristics of the operation of foreign banks.Then,it discusses the effect of the entrance of foreign capital banks from the aspect of efficiency and stability in the banking sector.Finally,based on the theoretical analysis,the empirical investigation was done to analyze the impact of the entering effect in China's banking industry using the Panel- Data model.When doing the empirical analysis with the Panel-Data model,it is crucial to set the form of model correctly,because the sample data includes the information of individual,time,and so on.The paper makes the choice through the covariance analysis.According to the results of the regression model,the entrance of foreign banks did not lower the protit level of the domestic banking sector.On the contrary,the spillover effect began to-show in China.But the trend of changes in the cast of management is still unknown.In addition,from the results of the two indicators used to reflect the stability and risk-resisting ability of the bank's business,the banking industry in China has significantly enhanced its risk awareness.Comparing with the previous findings,the supervision of the banking sector has achieved good results,and the ability of risk resisting,has made great progress.With the full liberalization of the banking sector,the market share of foreign capital banks in China's banking industry will increase rapidly.In the increasingly intense competition,the banking industry of China can be invincible when they make good use of their own advantages,find the countermeasures in light of the actual situation and so on.