Influence Of Foreign Banks' Entry On China's Banking Market Structure

Since reform in 1978, foreign banks continued to enter our country, especially after China's banking market full opened up in the end of 2006 ,China has become the competition stage of foreign banks. Currently, the analysis of influence on China's banking structure after foreign banks` entering mainly in the domestic banking system's efficiency and stability, lack of relative discussion on the banking industry structure. However, both are based on the traditional SCP (Structure - Conduct - Performance) framework or the amanded SCP framework, market structure remains a major position in an industry analysis, plays an important role in the constraints the performance. Therefore, from theoretical, empirical, and case analysis to study the impact on China's banking market after foreign banks` entering is very necessary. This conductive will make foreign banks play a better role. Most of all, this conductive will further optimize the structure of China's banking industry.Before the foreign banks` entering, there are two departure in China's banking market structure: the high market concentration and the low performance deviated, the high market concentration and the low product differentiation. The essence of the two deviated is the deviated of too large scale and insufficient competition. In according to previous research results, the banking industry structure optimization objective is to solve the "Marshall conflict," that is, achieve economies of scale and remain competitive vitality. Therefore, reduce market concentration and barriers to entry, increase product differentiation to promote competition, is conducive to further optimize the structure of China's banking industry. Accord this, the paper based on three key decided indicators for analysis banking market structure: market concentration, product differentiation and barriers to entry, In accordance with the logical sequence: empirical analysis--theoretical analysis-- the case studies. Empirical Analysis accorded the two main points, the first is that draw the judgement through use data on the banking market structure for the main measure and the second is to learn from the dynamic model, through the measurement study to prove that foreign banks entering China's banking reduce the degree of market concentration; theoretical analysis explained the reasons from government policies, external economic and cross-conduction of the impact of foreign banks to enter China's banking market structure; cases analysis summed up different effects on South Korean banking market structure after foreign banks` entering, make recommendations on how to further optimization of China's banking industry structure. Finally, Come to the conclusion that foreign banks to enter China's banking industry is to reduce the market concentration and barriers to entry, increased product differentiation. that is conducive to further optimize the structure of China's banking industry. But the effect on the banking industry structure after foreign banks` entering is a dynamic process, with the passage of time and conditions change, the impacts is likely to changed from favorable to harmful. Therefore, we should alert and increase supervision after the full liberalization of China's banking sector, constantly optimize the structure of China's banking industry structure.