Study Of Factors Affecting Direct Investment In China Of Foreign Banks

As foreign banks developing in our country, local banking industry receive a great opportunity to develop, however, at the same time, they, must be sure, face serious challenges from foreign banks. This kind of situation makes significant and far-reaching impacts on our financial system and economy. Therefore, in order to help to make developing strategies of banks and financial policy, it is valuable to investigate the factors affecting foreign banks' investment in China.Based on Dunning's international eclectic theory, we get the conclusion that the investment made by foreign banks is the interaction of the two kind advantages, namely the location advantage, and the foreign banks' advantages, including the ownership advantage and the internalization advantage. Then, based on the conclusion made by analyzing the OL model, we set up a dynamic factor model, and use dynamic views to analyze the interaction of the localization advantage and the foreign banks' advantages form three levels. On the process of analysis, we take the situation of our country into consideration. From the macro-level, the investment made by foreign banks is a kind of floating international capital based on the consistency between the aim of our country of attracting investment and the goal of investment of foreign banks. From the middle-level, the investment made by foreign banks is essentially the relationship between our country's demand ability and the ability of investment of foreign banks. The demand ability depends on the character of our country' EPS system and the ability of investment of foreign banks depend on the frame of their own advantages. From micro-level, the character of our country' EPS system is formed by the economic factors, system factors and the political factors. About foreign banks' frame of advantages, ownership advantages include those banks' size and strength, experiences of international operation and stratagems; and at the same time, through following the clients, those foreign banks can realize their own internalization advantage. They also can fully use information technique to improve the efficiency of dealing with information. As a result those foreign banks can reduce their information costs and maintain their own internalization advantage.We adopt lineal equations to test the degree of the impacts of those factors on the investment. We test the explanation of the theory of "following clients" for our country. Parts of the results in this paper are not identical to the foreign scholars', because of China's specific situation, for example, the importation, preferential revenue policy, financial market development have negative impacts on foreign banks, and the financial control policy promotes the foreign banks' investment in short times, however the function is inconspicuous in long time. As a result, we should promote the development of financial market, and perfect the financial control, these kinds of measure, must be sure, can perfect our country's environment that attracts foreign banks' investment.