An Study Of The Impact Of Introducing Foreign Strategic Investors Into Chinese Banks

Since the regulators made the introduction of foreign strategic investors as an importantmeasure of the reform of Chinese banks，the debate about the reform of China’s bankingsector has never subsided. Most of the controversies about the foreign strategic investors arewhether they will endanger the financial security, whether underestimate the state-ownedshares, or whether can help Chinese banks improve corporate structure. This dissertationprovides valuable comments on them. We think that: introducing foreign strategic investors isa necessary step in the reform of Chinese banking sector, and under current legal andinstitutional regime, introducing foreign strategic investors would not do harm to the safetyin china. There also no evidence shows that state-owned equity has been sold unfairly.Further research is needed to understanding the impact of foreign strategic investors onChinese banks.This paper first specifically analyzes the status quo of the cooperation between Chinesebanks and their foreign strategic investors; on the basis of that we comb the cooperativemodes and effectiveness between Chinese banks and their foreign strategic investors. Thenwe use year2000-2011panel data of23Chinese banks to analyze the impact of foreignstrategic investors to the innovation ability and the credit risk management level of Chinesebanks; we distinguish the sample into banks with foreign strategic investors or not andcontrol the effect of selection bias and time change. Finally, we distinguish all the foreignstrategic investors into two modes: Chinese banks have one foreign strategic investor or theothers have more than one foreign strategic investors. The empirical results show that：theforeign strategic investors significantly enhance the innovation capacity of Chinese banksand reduce the level of credit risk of Chinese banks; shareholding ratio of foreign strategicinvestors was positively correlated with the improvement of Chinese banks credit risk; therole of major foreign strategic investor is significantly larger than the follower foreignstrategic investors.