Foreign Banks Into Effect On The Performance Of The Banking Industry In China

In the trends of global financial liberalization and international trade in financial services,the banking business significantly strengthened the international level, our banking sector is gradually opening up.According to China's WTO commitment, with the official implementation of "The People's Republic of China Regulations of foreign-funded banks,"December 11,2006,China fully opened the banking sector to foreign-funded banks, China lifted all restrictions on foreign financial institutions.Since then,foreign-funded banks have entered the Chinese markets in the era of full arrangement in financial services,financial system for safety assurance of external and internal closure of the pattern in the monopoly has been broken.With large-scale distribution of foreign-funded banks in China, foreign-funded banks have occupied more and more important positions in China's financial system. Although affected by the global financial crisis in 2008,the step of expansions of foreign-funded banks in China did not slow down. It is inevitable that this action will have significant and far-reaching effects on the entire Chinese banking and financial environment. Therefore, the studies for the impacts of our banking sectors on the Performance of China when the foreign-funded banks come into the market, which provide the decision-making basis for the Chinese financial policy formulation and development of the banking industry, and to improve ecological environment of China's financial stability, the studies has important theoretical and practical significance.This article reviews the entry of foreign-funded banks and foreign scholars on the impact of the host country banking research, and then layout of the development of foreign-funded banks in China's history and conducts a detail analysis.The next step we mainly analyze the Performance of China's banking sector when the Foreign Bank Entry. Finally, the findings of empirical analysis, we make relevant policy recommendations.This paper analyzed the influence on the entry of foreign-funded banks by using panel data collected from 14 major domestic commercial banks between 1996 and 2008.The empirical results show that the opening up of China's banking sector makes a positive role in enhancing the operating performance of domestic banks.The "competition effect" and "technology demonstration effect" of foreign-funded banks' entry have preliminary emerged. While the entry of foreign-funded banks have different effects on the state-owned commercial banks and joint-stock commercial banks.According to empirical results,we recommend:China's banks need to strengthen risk management of asset quality so as to improve risk quality,to develop intermediary business, focus on the autonomy of financial innovation, to increase profits by increasing revenues.The innovation of this article:1.A comprehensive explanatory variables are selected. This selects spread, interest rate, non-interest rate, pre-tax profit margin, operating expense ratio,management fee rates, total loan loss reserve ratio of foreign-funded banks to enter the seven indicators to measure the profitability of China's banking industry, management level,and comprehensive anti-risk ability of Investigation.2.GDP growth rate and CPI are chosen as macroeconnmic control variables.And the other difference (Zheng Ming, Huang Xian 2006)is this paper get rid of the interest rate, this paper think that our low interest rate market, this indicator cannot well reflect macroeconomic conditions.