A Study On Risks Of Foreign Banks' Entry On Domestic Banking In China And Policy Recommendations

In 2006, China's WTO transitional period was over, financial market open to the outside, the banking sector is the important part of the financial system, so the introduction of foreign banks has become the most important part for the financial sector opening to the outside world。Foreign banks brought opportunities when entering China's financial market, such as advanced management and advanced technology, we can use "competitive effect", "guide the effect "to improve the operating efficiency and competitiveness. However, foreign banks brought China financial markets the risks, because China's financial market supervision is imperfect, and China's financial market is fragile, such as low capital adequacy ratio, low profitability and so on. To some extent, the risks brought by foreign banking in our country has threat the banking security of our country, as a result, it is necessary to study the risks brought by foreign banking in our country,and sum up the specific measures to prevent and resolve the risks.This article introduces the purpose and significance of research and the study at home and abroad, then based on the theory that defines foreign banks'entry and risk of banking, it studies the risks that brought by foreign banks when entering into banking industry of our country, then in response to these risks we get some countermeasures which can prevent and resolve them. The theory part of this article introduces cross-border operation of foreign banks, the risks of banking and other basic relevant theories. The main part of this article mainly analyses the status quo of fragility of our country and the risks that brought by foreign banks when entering into banking industry of our country:Fist, it studies the status quo and the impact brought by foreign banks when entering into our country, that is, to some extent, it increases China's banking system's vulnerability, then it researches the risks that brought by foreign banks when entering into banking industry of our country, such as increasing the difficulty of our banking industry' supervision, turbulence of credit market and so on, then it analysis the risks of our banking brought by Subordinated Debt Crisis in America. At the same time, it learns experience and lessons from South Korea, Japan and foreign banks in Latin America, then get three worthy inspirations for our country. The last part of this article through a comprehensive study, aimed at the risks that brought by foreign banks when entering into banking industry of our country, sums up the specific countermeasures and proposals which can prevent and resolve the risks.