The Study Of Transnational Business Location Choice Of China’s Commercial Banks

Since the1978reform and opening up, China’s economic construction has maderemarkable achievements. Through equity reform, a number of large state-ownedwere listed, and gradually transformed into professional commercial banks. In orderto expand global market share, absorb overseas advanced financial knowledge,information and management experience, use overseas resources and advantages, andcontinue to enhance their own profitability, large commercial banks in China have theinternal requirements to develop the Overseas market. Bank transnational business, aneconomic phenomenon, began a wave of financial liberalization. China’s "going out"strategy has been a decade or so, the outstanding enterprises in China’s manufacturing,transportation, resources, mining, communications and other industries in this perioddo transnational business successfully through mergers and acquisitions, Greenfieldinvestments, and other means. However, China’s financial sector, especially thebanking sector, its attention always focuses on how to protect the healthydevelopment of the domestic banking sector. With the continuous optimization of ourdomestic financial system and sound, how to successfully "go out" has become anurgent problem. Because of a wide variety of historical reasons and the actualconditions of China’s banking sector, transnational business development history isrelatively short, and lack experience. Except the Bank of China, there is nomultinational bank in real sense. The transnational business of commercial banks inChina is in its infancy, and how to take the first step is the key, that is,"going where".Firstly, through a systematic combing of the literature, the paper reviews theinduction of cross-border banking business location choice theories and the domesticand foreign research. And then the overview is subdivided into: Analysis of thestatus quo, the stage of China’s major commercial banks transnational operationsdevelopment and of motivation. Then, the perspective is transferred into theinternational banks. Through comparing their difference, paper focuses on international banks’ advantages and draws some valuable lessons to borrow for itsown purposes. In the fifth part, combined with the actual situation of China’sbanking industry and the previous research results, the paper chooses a number ofrepresentative factors, and through the panel data model analyze the factors affectingthe location choice of multinational operations of commercial banks in China. Theempirical results show that bilateral trade relations and lending rates in the hostcountry have a significantly positive impact on China’s banking industry layout, whilethe host country government regulation have a significant negative impact on China’sbanking industry layout. Results also show that China’s banking industry autonomousinvestment in the United States, Japan and Germany is relatively large. At the sametime, there is a case study of famous foreign Citibank and Bank of Scotland. Finally,on the basis of preceding analysis, the paper puts forward four proposals to perfectChina’s cross-border banking business location choice: give full play to the servicefunctions of government institutions and improve the comprehensive strength ofChina’s commercial banks; choose the right target market scientifically; consider thevariety of market access; perfect target market marketing management and improvethe comprehensive risk management level of China’s commercial banks.Two research methods are applied to analyze China’s commercial banks totransnational business location selection problem. The first is a comparative analysis,combined with the global regional development strategy Case of well-knowninternational banks such as Citibank, Royal Bank of Scotland. The second is theempirical analysis, the paper uses panel data model to illustrate the key influencingfactors which must be considered by the commercial banks in China transnationalbusiness location choice. Research methods break through the limitations oftraditional qualitative analysis of the problem, and the paradigm of the empiricalanalysis overcome the subjectivity in terms of domestic commercial banks, makingthe analysis more convincing and practical significance.