China's Banking Industry Opening Up And Operating Efficiency

With financial globalization and world economic integration, the opening up of Chinese banking has become an irreversible trend. Countries are facing opening or further opening their banking sectors, and international experience also shows that foreign banks can produce profound influences on host countries which include China. So it is meaningful doing some research on effects that opening up brings to operational efficiency of Chinese banking.This article is composed by six parts. First, it summarizes foreign and domestic research on the opening up level of banking and effects on operational efficiency which brought by opening up of banking. Second, the paper introduces the course and status of the opening up of Chinese banking since 1978. Third, on the basis of analysis above, this paper gives a quantitative measure of opening up level and operational efficiency of Chinese banking. Forth, it discusses the advantages and disadvantages which our banks have to face. Fifth, it works up with a panel data model which analysis empirically from four aspects, which are profitability, safety, liquidity and growth of banking, using the soft ware of Eviews 3.1, and data is selected from China's 13 representative banks. The results show that opening up brings up the profitability and safety of Chinese banking, but brings down liquidity and growth of Chinese banking. At last it comes up with some suggestions about how to take a rational attitude towards opening up, such as enhance the competitiveness of domestic commercial banks, firm the financial supervision system, strengthen co-operation with foreign banks and gradually open to domestic market.