Study On The Impact Of Foreign Strategic Investors On The X-Efficiency Of China's Commercial Banks

In recent years, along with the progressive accomplishing of China's financial market reforms, the China's commercial banks'joint-stock system reforms have been gradually finished and their scale of assets expanded rapidly. And also, these banks'operating efficiency has also significantly improved. However, as the answer of our promise to the WTO, China has already authorized the foreign banks the national treatment in its financial market. So China's commercial banks are facing unprecedented fierce competition now. At the same time, the applycation of New Bsael Agreements needs China's banks which oriented international banks to improve their risk management. In order to adapt to these new situations, China's commercial banks have started to introduce foreign strategic investors, with a view to obtaining management mechanisms and enhance the technical level. But there always have been suspicious voices around this systerm since it started, and more and more intensively during in these international financial crisis times. Based on this background, this paper studied the effects on the X-efficiency of China's banking industry, after the foreign strategic investors began to hold our commercial banks'equity.In this paper, the author firstly outlines the X-efficiency theory and TNCs engine theory. Then by the supporting of these theories and the research results have been made, the author create the three effects, they are system change effect, management intervention effect and technology export effect, to describe the mechanisms of how the foreign strategic investors works on the efficiency of China's commercial banks. And then due to the need of empirical research, the efficiency of commercial banks in China was defined as X-efficiency. After the econometric measure of Chinese banking industry's X-efficiency value, the author further test the correlation between the three effects'and the X-efficiency values. And the empirical results show that all of the three effects have a positive relation with the X-efficiency of China's banking industry. Finally, the paper point out that the introductions of foreign strategic investors have played a positive role on the efficiency'improvement of China's banking industry.In conclusion, this paper point out that so far, the introduction of foreign strategic investors can enhance the efficiency of China's commercial banks. So we should continue this policy. However, by summarizing the experiences of the introduction and analyzing the results of the empirical test, the author think that the strategy about introducing foreign strategic investors of Chinese commercial banks need to be integrated. In the next stage of the introduction, we should pay special attention to these strategies, those are insisting introduction strategy, flexible holding strategy, careful selection strategy, in-depth cooperation strategy and self-reliance strategy. To using these strategies can help China's commercial banks to introduce the real helpful foreign strategic investors. And furthermore, we can hope that these investors can bring us substantive help in improving China's commercial banks'efficiency.