Comparative Study On Financial Competitiveness Of Chinese And Foreign Commercial Banks

With the increasing development of the financial globalization, the internationalization of Chinese banks is an inevitable trend. After the 2008 Global Financial Crisis, the battered U.S. and European banks made a series of positive adjustments and gathered experience to improve their comprehensive competitiveness. Financial competitiveness is an important component of the comprehensive competitiveness of commercial banks. It is also a driving force for maintaining liquidity, creating value and stable operation. It can help commercial banks to effectively implement financial strategies and expand financial competitive advantages. Facing the fierce competition in the financial markets at home and abroad, there is an urgent need to study how to improve Chinese commercial banks’ financial competitiveness. With the rapid development of our country’s economy, Chinese commercial banks have enhanced their capital strength and improved their profitability remarkably. In recent years, with the decelerated economic growth and interest rate marketization, financial competitiveness problems faced by our country’s commercial banks are emerging. One problem is the increase of China-funded banks’ non-performing assets. Another problem is the incomplete liquidity risk regulation. Additionally, there was a state of legal deficiency on Internet financial supervision. Forth, Chinese commercial banks have single business structures generally. Fifthly, weak international operation capacity is a common problem for Chinese commercial banks. With the change of economic and market environment, Chinese commercial banks should change their previous pattern that they rely profit growth on scale expansion. They are badly in need of reform and transformation to improve their financial competitiveness and expand financial competitive advantages.This paper selects 31 commercial banks in 11 countries and regions of Asia, Europe, North America and South America as the research objects. According to the connotation of financial competitiveness, establish and complete a hierarchical evaluation system which contains 16 quotas to evaluate financial competitiveness of sample commercial banks. Then extract and name common factors by the objective factor analysis method, based on the calculated factor score to rank comprehensive competitiveness of sample commercial banks. The results show that financial competitiveness of commercial banks in China is better than that of foreign banks, especially large commercial Banks. Other joint-stock commercial banks and city commercial banks develop very quickly as well.According to the point of each factor, Chinese commercial banks have the competitive advantage of scale and profitability. However, in terms of diversified operation ability, liquidity, asset quality and capacity of international operation, Chinese commercial banks have a large gap compared with foreign banks. This paper further analyses the reasons for these disparities, found that commercial banks in China have the disadvantage of financial innovation ability insufficiency, the lack of international operation ability and regulatory defect. Finally,in order to improve the financial competitiveness of Chinese commercial banks, this paper suggested that commercial banks of China should make efforts to improve the ability of financial innovation and promote intermediary business; improve the methods of risk measurement and risk monitoring indicator system; promote international operation ability by transnational merger integration of resources and cooperation with companies. So that, Chinese commercial banks are able to consolidate and develop their own market and business in the competition with foreign banks to improve the financial competitiveness in the international financial market.