The Research On Foreign Bank Entry And Reform Of China's Banking Industry

Since China's reform and opening up began, more and more foreign banks entered into China, and their influences on China's banking industry and the financial industry have been growing. After China joined WTO in December 2002, foreign banks began to move into China more aggressively. Foreign banks' entry into China market will exert deep influences to China's banking and financial industry, which will inevitably bring both positive and negative effects. This thesis focuses on the influences of foreign banks' entry into China market on current reform of China's banking industry, based on detailed analysis, the author proposes some relevant suggestions on reform of China's banking industry.The research methods adopted by the author include: combining theory with practices, comparing the measures taken by different countries, doing historic analysis, and case study, etc.Key viewpoints are as follows:1. There are various theories about banking industry's opening up. In developed countries, the relevant theories are not simple, while in growing markets, they tend to be more complicated. For the countries facing reforming of banking industry, the entry of foreign banks has positive short-term effect, while the long-term effects are hard to define.2. The experiences of other countries in this field indicate that when attracting foreign banks to join reform of China's banking industry, it is important to maintain a balanced development for both China's banks and foreign ones. The key benefits to be expected by attracting foreign investment are: learning advanced technologies and better management procedures , reforming and improving the current corporate organizational structure and governance.3. Historically, one of the most important reasons which resulted in the recession and ruin of Shanxi's draft banking industry was the entry of the foreign banks. The current practices show that the entry of foreign banks into China market has brought huge positive effect, especially on helping the reform of state-owned commercial banks, improving the competitiveness of China's commercial banks, and facilitating the enhancement of supervisory level. The author gives a detailed analysis on the case of Shanghai Bank's cooperation with foreign bank.4. The entry of foreign banks will bring all kinds of challenges, such as how China's commercial banks should cooperate with foreign strategic investors during the reform , the direct competition facing China's commercial banks, and the challenges facing the supervisory body of China banking industry, etc. The author proposes relevant suggestions on how to deal with these problems, especially on the modes and methods of how China's commercial banks should seek partnership with foreign strategic investors. The author also proposes other necessary measures on how China's commercial banks can improve their own competitiveness and suggestions on how to better supervise foreign banks operating in China.The research in this thesis are practical and will be able to give some guidance on the reform of China's banking industry in terms of attracting foreign investment. It will help push the reform of China's banking industry to some extent.