Foreign Banks Into China's Banking System And The Effect Study

Foreign banks business has been developing swiftly in our financial market after China joined the WTO. The entry of foreign banks results from open economy and it is an irreversible historic tendency. That entry is a rapier. On the positive, firstly it would develop and improve Chinese financial market, secondly it would improve the management and administration, and thirdly it would improve the management and administration of Chinese banking. On the negative side, it would challenge and strike Chinese banking seriously. The huge bad assets and the poor capital funds in Chinese banks would not only weaken their competition abilities but also harm their system safeties.This article analyzes the development of foreign banks in China in the frame of the finance deepening theory and the finance developing theory. Through the integration of theory with practice, this article takes notice not only the reality in China but the new tendency of banks internationalizing, adopts the combination of general and special, experts some theories correlated to economics and finance .On the train of thought, this article analyzes the positive and passive effects of foreign bank entry and its reason, at the same time, points out the methods of promoting core competition of Chinese banks: we should enhance the supervision and control of foreign banks ,and expedite the implement of ,quicken the advancement of the market interest rate by macroscopic policy which is meaningful not only to the stable running of banking system but also to the economy safety, politics and society stability.