Research Of China's Strategy To Cope With Entry Of Foreign Banks

In 1979, Japan Export & Import Bank entered China as the first foreign bank in China.. Until now, foreign banks have operated in China for more than 30 years. The market environment and regulatory environment foreign banks operated in changed greatly. Meanwhile, foreign banks conducted localization actively. They speeded up overall strategic arrangement in terms of business, institutions and personnel and maintained a relative rapid growth.In recent years, foreign banks in China have a large-scale on assets, liabilities, business, in spite of the financial crisis, foreign banks in China have accelerated the pace of development, adjusting the business strategy constantly, expanding business scope, recently the foreign banks have entered the rural financial market. The entries of foreign banks influence the host country on two sides-advantages and disadvantages. In the matters of China, the advantages lie in the following aspects:first, entries of foreign banks help to optimize the ownership structure of China's banking sector, strengthen the banks' internal management, improve the management efficiency; second:entries of foreign banks intensified competition in China's banking market and optimize the market structure, improve the overall efficiency of China's banking sector by learning effects, technology demonstration effect and competition effect, third, because the entries of foreign banks help to improve China's commercial banks' profit and risk management, so improve the stability.Firstly the paper summarizes the recent researches at home and abroad. Second, the paper analyzes the process and the status quo of the entry of foreign banks. Then discuss the impact of the entries of foreign banks by two ways:First, influence the efficiency of China's banking sector by changing structure of property right and bank market structure. Second, discuss the stability of China's banking sector for the sake of the entries of foreign banks, construct the bank stability index by the method of factor analysis, Regarding the BSI as the dependent variables, and other variables (the entries of foreign banks, the macroeconomic factor, financial factor and the market structure factor) to construct the multiple linear regressions model, the result is the entries of foreign banks have positive effects on the stability of China's banking sector. At last, make some suggestions on improving the efficiency and stability of China's banking sectors.