Research About Impact Of Financial Openness On Commercial Bank Performance In China

Chinese reform and opening up has been35years, and as thefastest growing and biggest changing state in the world, Chineseachievements during these years are obvious to all over the world.Finance as an important part of economic system, plays an indeliblerole. With the deepening of Chinese financial openness, Chinesebanking sector as a pillar of Chinese financial system also gotunprecedented development. It is well known that the bankingsector can indirectly through the banking manage and supervise theproduction and business operating activities of the nationaleconomy, and undertake the necessary responsibility of thedomestic financing and the flows of domestic and foreign funds,which is the important hub of China’s financial opening andeconomic development, and closely linked to Chinese financialopening. The present stage of China is in the economic transitionperiod and post crisis era, and the banking industry is facing a majorreform. So studying the banks performance in China under thecondition of financial openness is very important. Not only can wefind the mechanism through which financial openness affectscommercial bank performance, supply the theories of financial openness in commercial bank performance field, also help to findthe problems in the progress of the national economy, and providesthe basis for reasonably making policies.This article selects big commercial banks and joint-stockcommercial banks in China as the research object, from theperspective of financial openness, combining bank performanceand financial opening, and analyzing the commercial bankperformance under the condition of financial openness. Specificdisplays in: first, synthetically integrating the theories of financialopenness, through the analysis of financial openness positive andnegative effects on economic growth development mechanism, andselection of the influence factors of financial opening on Chinesecommercial bank performance. Secondly, according to the weightof financial openness factors on the performance of commercialbanks in China, we select1994-2013economic data of20years, anduse the analytic hierarchy process (AHP) to measure Chinesefinancial openness’ de jure dimension level and de facto dimensionlevel. Last, with the financial openness index as the independentvariable, the bank internal factors and external factors as controlvariables, we establish a dynamic panel data model to explain theperformance of commercial banks by the use of GMM and researchthe financial openness’ different dimension level impacts on theperformance of commercial banks in China, and compare thedifferences.The final research result is that the financial openness’ de juredimension level is different from the de facto dimension level. Dejure dimension level of China is lower than de facto dimension level before2001, while higher after2001. Thus effects of financialopenness’ these two dimensions on the performance of commercialbanks in China is not the same. The empirical study shows that thefinancial openness’ de jure dimension level and performance ofChinese commercial banks has a negative correlation, whilefinancial openness’ de facto dimension level has a positivecorrelation to the performance of Chinese commercial banks.Obviously, the present financial openness level in China can be fitand help to increase the performance of commercial banks, whilethe official statutory financial openness level can limit the increaseof bank performance probably because of the need to pay costs foraimed-official readjustment of commercial banks.