Empirical Study On The International Operation Of Chinese Commercial Banks

Chinese banking system has been deeply reformed during the last three decades and the all-sided opening era for Chinese financial industry has come. With the systematic change and opening up, foreign financial institutions can compete with domestic commercial banks now. Developing and expanding international operation is the premise for China?s commercial banks to participate in worldwide competition, and putting efforts on expanding overseas business has been a certain trend in the reform and development process of China?s banking industry. Now, international business operation of Chinese commercial banks is still in its infancy stage, and there are plenty of areas that we need to improve. Therefore, the study on the international operation of Chinese banks is a significant issue.This paper firstly introduced theories about commercial banks international operation and then analyzed the determinants for internationalization of Chinese commercial banks from three aspects on the basis of those theories and the reality of Chinese banks by regression analysis, the empirical results indicate:Firstly, there is a positive correlation between the bank scale, cognitive of overseas running and the internationalization of banks, with cognitive having a greater influence. One possible explanation is that China is still at the beginning stage of banking internationalization. However, according to the experiences of international large banks, we could expect that bank scale will be more important in the future development of Chinese commercial banks.Secondly, as a special factor of China, institutional change has a significant influence on Chinese banks overseas operation and we could examine it from the levels of marketization (MKT), openness (OPN) as well as non-state-owned (NSOL). Market size of home country as another factor didn?t show obvious influence, which is due to the developing status of Chinese market, changing from conservative and simple to open and diverse.Thirdly, as to the host comity related factors, bilateral trade has a positive correlation with the bank's internationalization. Besides, factors like geographical and cultural distances (DIS & CUL) between home and host countries, whether there is a finance centre in the host country also have great influence on the internationalization of Chinese banks.GDP per capita (HGDP) and exchange rate (FX) seem to have poor explanatory abilities. We believe that based on the foreign developing experiences, these two factors will be key factors in Chinese banks international operation in the future.In the last part, based on the regression results, the paper proposed improvement strategies accordingly for Chinese commercial banks international operation. All of these will benefit the future overseas business expansion of Chinese commercial banks.