Foreign Banks Into China's Banking Market Structure Of The Study

In recent years, accompanied with the global finance opening and the development of financial service trade, it is a universal matter of concern in the world's bank system that the foreign bank is extending and deepening its business in the host countries. Along with China's joining the WTO and realizing the five years' pledge gradually, the time which China banks and foreign banks fully compete with each other arrives. So it is important in both theory and practical meaning to do research on the influence to our Banking industry market's structure of the entry to the foreign banks.This paper first contrast the management character and characteristic of foreign banks with various kinds of China banks, and restrict and divide the China bank which is referred in demonstration and completely the same with the foreign bank in the management character and business scope into state-owned Commercial bank, the joint stock system bank and the city Commercial bank three kinds. Then we deduce the influence of the foreign bank's entry to our bank industry system's structure based on the analysis of our bank industry's transformation process, the present situation as well as the foreign bank's development in China and the present situation. It mainly displays on diluting our bank industry's deposit, loan and profit market concentration ratio and so on. And based on the 11 years' related bank panel data from 1997 to 2007, we set up two empirical models using the econometrics method, seeing about the influence to our country banking industry's deposit market concentration ratio separately. And make a conclusion that the foreign bank's entry does a negative function to our banking industry but the influence is very little by now. It also verifies the foreign bank's entry brings competition effect which plays a role of impelling our bank industry market's reform to some extent. However, as time goes by, it may change the structure of our bank industry clients a lot because of the entry of the foreign bank, thereby reduce the concentration ratio of deposit and loan market. It will have profound influence to our banking industry market structure.