Foreign Banks In Shenzhen, Foreign Currency Deposits And Loans Markets

Chinese bank industry completely opened at the ending of the five years WTO transition period on December 11^th,2006. Limitations on arena and customer to foreign banks was eliminated, thus foreign banks get a favorable chance for progressing their business in China. The competition between foreign banks and Chinese banks will be austerity. Shenzhen is one of the earliest cities that open to the foreign banks, this thesis adopts foreign banks that operate in Shenzhen and the foreign currency deposits and loans market in which foreign banks have comparative advantage as objects to research. This paper looks into the impact of the foreign banks on the market structure and pricing system of Shenzhen foreign currency deposits and loans market. It is useful for further study on the impact of the foreign banks on the Chinese bank industry market.This paper studies on the changes of market structure of Shenzhen foreign currency deposits and loans market. It proves that the foreign banks do not give a heavy attack to the domestic banks in the domestic enterprises market, but in foreign enterprises and high-value-added personal sector market, the foreign bank make visible competitive effect on domestic banks.Based on Dournot game model, this paper analyzes the factor of foreign currency loans pricing system, it proves that after foreign banks entry interest rate of foreign currency trends to decline.At the end, this paper suggests that China's bank could adopt following strategies to compete with foreign bank. The four State-owned Commercial Banks and some competitive Stock Commercial Banks could diversify their business field, and the other banks should concentrate on its target market. Select 'flight to quality' strategy instead of 'flight to captivity ' to improve customer's structure. Develop co-operation relationship with foreign banks and avoid hostile competition to get win-win.