A Study Of Participation Of Foreign Investment In The Reform Of Banking System In China

Since all-around financial opening started in the end of 2006, banking system reforming in our country has been entering a new period. It's very important to analyse and review the impact on home banking caused by overseas investment ingress and to research coping strategy. The banking reform is a much-talked-about topic among the area of financial reform, and is a complicated, systematic and long-period project, which involves a huge brand, such as bank institutions reform, consummation of market system, and also the creation of bank regulatory system. This thesis focuses on the latter side, that is overseas sources of investment participate in market system reform in another country. Starting with introduction of ways in which overseas sources of investment participate in market system reform in another country, the article summarizes motivation of overseas investment ingress into banking market in host country, followed with analysing possible impact on the banking in host country caused by overseas investment ingress in theory. In the forth part, in allusion to overseas investment participating in the bank institutions reform in our country, the article centers on analysing and reviewing the impact of overseas investment participation on three aspects. Firstly, using research findings of Claessense, et al.(2001) for reference, it reviews and tests possible efficiency improvement on the home banking caused by competitive effect of overseas investment launching business through setting up operating and corporate institutions. Secondly, it reviews the possible impact on financial stability and financial safety in our country caused by a large amount of overseas investment ingress. Thirdly, it takes China Construction Bank as a case to analyse the influence to it when overseas investment enter through share-holding as the strategic investor. In the end, based on the analysis and empirical research, some policy proposals are advanced to cope with overseas investment ingress, which include, such as positive absorbing foreign investment and harmonizing the relation between foreign investment and Chinese banks, strengthening supervising foreign-funded banks and accelerating normative and healthy development of foreign-funded banks, and advancing core-competitiveness of our domestic commercial bank, increase training high-level financial professionals and foster financial human resources market, and so on.