A Research Of The Effect Of The Introduction Of Foreign Strategic Investor On The Performance Of Listed Banks

Banking industry as the core of modern economy is the main body of the financial industry, and it plays an important role in supporting the economy and promoting the healthy development of the national economy. Due to the full liberalization of China’s financial markets and vigorous pushing from our government, the majority of listed commercial banks have introduced foreign strategic investors. Since China Everbright Bank in1996for the first time had introduced the Asian development bank as a foreign strategic investors, especially after2003, both the number of shares and the stake of foreign strategic investors have emerged rapidly. Based on the experience of foreign countries, the introduction of foreign strategic investors has a promoting effect on performance level of the country’s banking sector. However, on the current situation of our country, people from all walks of life have different ideas about effect of introduction of foreign strategic investors. Therefore, it is necessary for us to track research and analysis on the problem which the listed commercial banks introduce foreign strategic investors to find out the shortcomings. And we attempt to formulate corresponding policies and measures in order to ensure that the introduction of foreign strategic investors would give full positive effect on banks’ management.From foreign research literature, this paper mainly expounds whether the introduction of foreign strategic investors would have a promoting effect or not on the banking of the host country. Combined with the actual conditions of our country, this paper mainly focuses on three aspects of the domestic research:First, whether foreign strategic investors should be introduced or not; Second, the introduction of foreign strategic investors would have a positive effect on our banking industry; Third, the introduction of foreign strategic investors would have a negative effect on our banking industry. After organizing and classifying the relationship between foreign strategic investors and banks operating efficiency from the perspective at home and abroad, review was carried out so that we can have a comprehensive and clear understanding on the relationship.On this basis, the paper defines the basic concepts of foreign strategic investor, and elaborates the related theory about the relationship between the introduction of foreign strategic investors and bank management, including the principal-agent theory, stakeholder theory, institutional change theory and the theory of strategic alliances and so on. This has laid a theoretical foundation on the later causes and effects analysis about the introduction and exit of foreign strategic investors. In understanding the process of introducing foreign strategic investors in China’s banking industry and its related cooperation, this paper analyzes the reasons and effects on which the listed commercial Banks introduce strategic investors. However, since the end of2008and the beginning of2009, a large number of foreign strategic investors have sold our holdings of bank shares. Based on this phenomenon, this article focuses on the reasons and effects that foreign strategic investors exit the listed banks. The empirical part of the paper focuses on the theoretical knowledge and associated test methods of panel data model, and simply describes the choice of the indicator variables and data sources. On this basis, this paper constructs the model of the empirical study in this paper. In the end, this paper uses panel data of10listed banks from2002to2012as sample. We make descriptive statistics, unit root test and cointegration test on the panel data and make the Hausman test on the model to determine the final applicable model, and then conduct panel data regression.Empirical regression results show that the introduction of foreign strategic investors and the shareholding ratio have a significant positive correlation on listed Banks’capital adequacy ratios and pre-tax profit margins,and have a significantly negative effect on non-performing loan ratio which is consistent with the expected. The introduction of foreign strategic investors and the shareholding ratio have a different impact on non-interest income ratio and the cost to income ratio, and have a non-significant impact on loan to deposit ratio, which may be associated with the current financial crisis. That foreign strategic investors exit the listed banks in our country will significantly reduce the bank’s capital adequacy ratio and liquidity levels of bank assets, and increased non-performing loan ratio of banks. It reflects from the side that the listed commercial banks introduce foreign strategic investors would have a positive effect on bank operations. According to the current situation of China’s introduction of foreign strategic investors and the results of empirical analysis, this paper puts forward some innovative policy recommendations, including the rate of return on foreign capital grading restrictions, etc., and expects to provide some useful references in which foreign strategic investors participate in the listed banks’ management in our country.