The Impact Of Internationalization Of Commercial Bank On Domestic Financial Market

Following the development of economic and financial globalization around the world, the commercial banks are accelerating its internationalization process nowadays. Especially when our financial market is complete open to the foreign financial intuitions, it is the necessary development strategy for our commercial banks to proceed the internationalization process. However, when our commercial banks are proceeding internationalization process, it will certainly bring some impacts on the domestic financial market. This paper will mainly analyse what are the impacts are brought to the domestic financial market during the process of commercial banks' internationalization and how to solve or eliminate those negative effects.The complete meaning of commercial banks' internationalization is including two aspects: the first aspect is the foreign banks entering our domestic financial market to do the business, another aspect is our commercial banks' going outside to do the multination business in the host country. This paper will use the theory of financial deepening and Stackelberg model to analyse the main impacts on our domestic financial market resulting from foreign banks entering to our domestic financial market and our commercial banks going to the host country for internationalization. These impacts will be analysed from two aspects which include the positive side and negative side. From the theory study and the econometrics demonstration, we have found out that the commercial banks' internationalization will influence the domestic financial deepening and commercial bank's management efficiency etc positively. While in the process of the commercial banks' internationalization, it will also effect the domestic financial market negatively which will expose the domestic financial market to international risks and threaten to the monetary policy etc. At end of the paper, we give some proposals to solve the negative impacts. Meanwhile, the paper will discuss the route for commercial banks' internationalization.From the preview study of banks' internationalization, there are few papers to research the impacts especially the negative effects to the domestic market from the broad meaning of banks' internationalization. So I hope this paper can give some theory basis to our commercial bank's internationalization strategy.