Banks Operating Cross-border Analysis Of Regional Selection Based On The New Basel Accord

Banks operating cross-border is an economic and social phenomenon, started the wave of financial liberalization, driven by the of economic integration, financial globalization, financial innovation and technological progress, became more and more drastic, has become a focal point of the international academic community. The implementation of Basel II has more far-reaching implications. With the start of opening of domestic financial markets to foreign country, the banking industry gradually shifted attention to concern about how to "go out" to develop, how to take the crucial first step is clearly important, that is, "going out" but "to where", the research questions have a higher significance.location selection of Banks operating cross-border based primarily on the theory of international trade theory, industrial organization theory, theory of foreign direct investment, the paper quoted the principal of comparative advantage theory of Aliber, three classification theory of Gurbel, Dunning's Eclectic Theory and the Service perspective of the theory of Banks operating cross-border to follow the client.Multinational banks in the process of overseas expansion (not including the colonial period), can be found many multinational banks concentrated in a small number of countries and cities. According to the study, the internationalization of multinational banks determinants of location is divided into three categories:First, the host of factors, including the profit opportunities, the characteristics of the host system, level of economic integration, opportunity for profit is one of transnational banks operating the most basic determinants. Better prospects for economic growth is a cross-country bank of choice for overseas expansion, multinational banks to enter the economic scale and international trade in a relatively large country, such a market opportunity for more profit; At the same time, should be at the risk of a relatively small country, the financial the possibility of crisis the smaller countries.Characteristics of the host system, that is, the host country policies on the regulation of factors, play an important role of banks international expansion in the process, explicit and implicit barriers that affect the system of cross-border banking activities. Multinational banks overseas site selection preferences in legal control over lax financial supervision and management of the country or place less.Multinational banks and their branches of the home country of the host country where the degree of integration, such as the level of bilateral trade (economic variables), the linguistic and cultural similarity, geographic distance (non-economic variables), is an important factor in banks overseas expansion.Second, the bank's own factors, including bank's scale and bank's strategy, bank scale reflects the strength of the bank, the more likely the greater the scale of overseas investment. On the one hand, because big banks have a relatively more large enterprise customers need to follow the big clients for overseas investment and overseas expansion; on the other hand, is a relatively small bank, large banks to the overseas development necessary to keep the deposit and lending risks. Third, the impact of home country factors, including domestic financial management policies, the degree of market competition. Home country government is oriented to the domestic banks that the Government's policy-oriented international efforts and support, which the bank's overseas expansion has a direct effect. Developed country's banking sector, through the cross-border operation, deposit and lending at higher spreads, lower the efficiency of the host country banks have easier access to the comparative advantage of the market.Published in 2001, in 2006 the implementation of the new Basel Accord on the calculation of regulatory capital, and banks for their own method of calculating economic capital differences, have an impact of Multinational bank's area of selection.The main risk of the new protocol and the calculation of regulatory capital is not in favor of considering the geographical diversification, especially cross-border portfolio diversification effect of the overall risk in the calculation of the role, on the grounds that relevance and diversification effect is difficult to quantify. Multinational banks without taking into account the diversification effect of cross-border cases, the calculation of overseas operations and assets at risk, banks may have over-estimated the overall risk and regulatory capital requirements and to increase the regulatory costs, lower economic performance. This is a new agreement on the major banks operating cross-border negative factors.But the new agreement also explicitly requires banks portfolio through diversification to reduce the concentration risk, including reduced exposure to the same degree of concentration of the region. Because of cross-border banking assets at a more geographically dispersed, the risk of lower concentration, so this is the positive impact of the new agreement.Based on the impact of the new agreement, the country's sovereignty and to monitor and control risk, assess the status will become more prominent: first, economic capital and regulatory capital constraints, in the calculation of country to be added to the risk factors, both the requirements of regulatory compliance, but also the need to improve economic performance, but more economic capital should be used; Second, in order to reduce the regulatory capital requirements and regulatory costs, multinational banks area selection should be based on high-level credit market-oriented; three multinational banks operating in select developing countries, is because these markets with low correlation to developed country markets, it is necessary to consider the concentration of credit at a higher level, but at the same time and developed countries / markets market lower correlation , exert effects of geographic diversification to reduce overall risk.Curve through the use of efficient frontier analysis of cross-border banking business area analysis is to select according to their risk appetite, risk management and profitability in the overall goal to determine the location of curve, the slope and shape of cross-border operation of banks to determine a fair return / risk portfolio. Based on the premise of risk control, regulatory capital and economic capital-constrained, through the analysis of the United States money center banks and other banks in foreign assets of structural changes in the distribution of portfolios, we can see that cross-border operation of banks in the United States position in the selection would reduce the risk of placing greater major status.At present, China's multinational operations of banks tend to advanced "big country" to enter, but the commercial banks in China compared with developed countries, banks do not have a comparative advantage, and the Asia-Pacific region in which our country as an emerging market, with more and more Chinese economic and trade exchanges close, China's commercial banks should be developed cross-border operation "big country" to start, or from the close economic and trade exchanges, "neighbors" to start? Through the use of banks operating cross-border location of the decisive factors in selection theory, and theory and practice as the combination of economic data, can be analyzed in the Asia-Pacific region where our country against our country has a certain advantage.First is a host factor, the great profit opportunities. Asia-Pacific region a huge economic output, sustained and rapid economic development, economic power increased, and the Asia-Pacific region and the region's external trade expansion, the banks are enormous business opportunities in the region. Asia-Pacific region, the larger the individual high-end market, and continued to grow, relative to other regions of the world, the Asia-Pacific region at the number of high net worth clients in North America and Europe only to up, but the growth rate is higher than on North America and Europe, very broad market.Asia-Pacific region with a higher degree of integration of China and is conducive to China's commercial banks operating cross-border. The rapid development of China's foreign trade, according to information released by Ministry of Commerce website, our country and the Asia-Pacific Economic Co-operation import and export volume of China's global imports and exports accounted for 67 percent of the total. Asia-Pacific region and the current large-scale enterprises is the focus of regional cross-border operation, in accordance with customers to follow the theory, which the Asia-Pacific China's banking institutions for the development of the enormous potential market. Factors in the integration, language, culture is also similar to the overseas expansion of multinational banks one of the factors taken into account. Asia-Pacific region, overseas Chinese, overseas Chinese in the global distribution of the most concentrated, the overall size of the largest and most powerful economic strength.With the internationalization of the RMB has been continuously deepened, the RMB overseas market taking shape. Because of China's political stability, economic development, the value of the RMB continues to rise, in some countries the government has officially recognized and publicly announced that the RMB freely convertible local currency, the RMB foreign exchange reserves into the currency basket, and day-to-day announced the RMB exchange rate with local currency. Second, the impact of home country factors, the RMB from China's development trend of management policies, the RMB will continue to develop in the direction of international and eventually become fully convertible in international currency. Although the RMB is not freely convertible currency, its exchange rate with the U.S. and some Asian currencies have gradually linked to show the relationship between our country at the surrounding countries and regions, economic and trade transactions have been many more and more to use the RMB-denominated, billing and payment. RMB in surrounding countries and regions, the growing influence of the actual flow levels have reached a certain scale, which for domestic banks to conduct RMB business in overseas conditions created.Asia-Pacific market is a vibrant market, full of opportunities for business development, from the above analysis can be drawn, if the selection of domestic banks to expand in the Asia Pacific region, with banks operating cross-border location choice determinants of the match, China's commercial banks should be the process of internationalization of the location choice is important.