Study On The Impact Of TFP Of China's Commercial Banks' Internationalization

With the opening-up policy of China's financial industry, and under the background of economic and financial globalization, China's banking industry has to actively respond to the increasingly fierce competition and challenges from foreign financial institutions, international management is already an irreversible trend. China's commercial banks expand smoothly in the process of access to the international market; both asset scale and profitability have gained a huge boost. However, with the scale-expanding and efficiency-increasing, whether the TFP of commercial banks also improve or not? TFP is not only an important index of measuring commercial banks' core competitiveness, but also is to determine whether commercial banks can develop stably or not in international market under a long term. International expansion of banks is currently in full swing, various aspects of internationalization undertaken can help to improve TFP or not? Because such issue is a focus of both academic research and the reality, in this paper, we do study regarding the impact of banks' international operations on its TFP.13 state-owned commercial banks and joint-stock commercial banks were selected as study samples in this paper. And they were divided into two types: strong or weak internationalization banks. By comparative analysis on international operations and TFP of these two-type banks, this paper use empirical study to explore what factors impact commercial banks' TFP in the process of internationalization, to put forward proposals for commercial banks to enhance TFP.Firstly, this paper clear the background and significance of the issue, then confirm the research contents based on research methods related to the domestic and foreign scholars. It also describes the research literature of internationalization and TFP of commercial banks, and details the mechanism of the influence of commercial bank internationalization on total factor productivity, then both inductive and combed the literature review and last reviews the existing literature about them. Furthermore, this paper describes the current situation of internationalization and TFP of commercial banks, and measures both of them. Finally, impact of China's commercial banks'international operation on TFP is described by empirical research. About the empirical research,13 large commercial banks (2005--2014 year)were selected as samples, using Malmquist in DEA to measure the productivity value, and comparing it between two-type banks: strong or weak internationalization banks. The results showed that the average TFP of former is higher than that of latter.Then, this paper choose the TFP of strong internationalization banks as explained variable, the proportion of overseas assets, overseas profits and overseas net interest income as explanatory variables, meanwhile, the capital adequacy ratio and NPL ratio?financial market efficiency?banking market concentration as control variables. By establishing specific empirical model, to analyze the impact of international operations of commercial banks on the TFP. The empirical results show international management of China commercial banks have some influence on TFP. Among them, there is no significant negative correlation between the overseas assets proportion and TFP, this shows that China's Banks should reasonably promote overseas assets, speed up the scale economies. Overseas profits proportion was significantly positively related to total factor productivity with Banks, this shows that our banks should actively expand overseas income-generating ability, enhance the level of profit. And overseas net interest income proportion and total factor productivity show no significant positive correlation, this result shows that the banks can't excessively depend on traditional loan business in our country, should actively expand the intermediate business to promote total factor productivity level.Last, according to the study of theoretical and empirical analysis, several specific proposals are put forward to enhance the management level and international competitiveness of commercial banks significantly.