The Effect Of Financial Service Trade Liberalization On The Performance Of Financial Firm

The 21^st century already entered the service and open economy age.As a productive service industry,financial industry has a close connection with other industries.Besides,financial industry has high added value,which affects the allocation of trade benefit between countries.So it plays an important role in the country's economy.But the development of Chinese financial industry started late compared with western developed countries.The competitive of Chinese finance is lower than the competitive of developed countries.Therefore,some scholar advocates that china should protect financial industry first and then open it until it develops maturely.However,some scholar considers that owing to the introduction the competitive mechanism,opening economy is helpful to the development of financial firm.As we all known,the higher opening degree shows the lower barrier to trade.This paper aims to research the relationship between trade barriers to financial service and the business performance of financial firm.First,we discuss the transformation of financial service.Second,we classify trade barriers by service delivery on the basis of WTO financial commitments and financial laws and regulations.Moreover,we measure the numerical value of trade barriers to financial industry,which show as service trade restrictive index.Third,we research the relationship between financial service trade restrictive index and operating profit margin by econometric analysis.The result of present situation analysis shows that financial service has low open degree and low competitive advantage.The decreasing service trade restrictive index shows the decrease of trade barriers to financial service.The empirical results show that the higher service trade restrictive index,the lower operating profit margin.When country reduces trade barriers to financial service,foreign financial firm joining the Chinese market and the flow of foreign capital becomes easier.The open of financial industry produce a positive spillover effect.For example,Chinese financial firm can learn advanced management experience from foreign financial firm,which is helpful to the development of financial firm.