Foreign Banks To Strategic Investors Into The Impact Analysis Of Chinese Commercial Banks

During the last two decades, more and more developing countries have lifted restrictions on foreign direct investment (FDI),gradually allowed the increase of the number of foreign banks in their countries and have granted foreign banks national treatment. As a result, foreign bank participation has increased tremendously in developing countries: in some Latin American and Mid-east European countries, over fifty percent of total banking assets are now in foreign-controlled banks. The increase of foreign banks entry and participation can have great impact on host countries' economy ,in particular ,the financial area.China obtained accession into WTO on Dec. 11, 2001.According to China's commitment on the opening of its banking sector ,China will gradually eliminate regional ,client and business restrictions on foreign banks entry and finally fully open up its domestic banking service market at the end of 2006.Foreign banks has sped up its entry into Chinese market ever since the establishment of the first representative office by Japan Ex-Im Bank in China in 1979. Since Asia Development Bank first purchased shares of Everbright Bank in 1996 and with the further relaxing of policies concerning foreign banks entry, entering Chinese market by purchasing domestic banks' shares has currently become the most preferred approach of overseas large banking corporations. A fad of introduction of foreign strategic investors into China domestic banks has formed in China. The year of 2005 witness a new wave of foreign strategic investors entry: 3 of the Big Four state-owned commercial banks which are China Construction Bank, Bank Of China and Industrial and Commercial Bank of China successfully introduced foreign strategic investors.Under current situation, exploring the impact of foreign banks especially foreign strategic investors entry into China carries profound practical significance to the development of domestic commercial banks.This paper first reviewed existing theories and literatures on foreign banks entry, including motives of foreign banks entry and the generic analysis of the impact of the entry on host countries and also impact analysis based on entry modes. The impact analysis focuses on competition and efficiency, financial market(including stability,...