Research On The Motivation And Path Selection Of Transnational Operation Of Chinese Financial Institutions

Since the 21st century,Chinese financial institutions have accelerated their transnational business.Large state-owned banks and securities,which have a long internationalization history,opened overseas branches and actively conducted overseas M&As with the intention of exploring overseas business.Based on this background,this paper firstly explains the motivations and characteristics of financial institutions' internationalization with comparative advantage theories,guiding effect theories,firm internationalization theories,and foreign direct investment theory.Then this paper sorts out the history of foreign and Chinese financial institutions'internationalization,and selects the relevant data of the 17 Chinese banks that have conducted multinational business,from 2009 to 2016.The empirical analysis uses a zero-inflated negative binomial model(ZINB)to work out the motivation for internationalization of Chinese banks.The study found that the motivation for transnational operations of Chinese financial institutions basically conforms to the traditional "following customers" theory and comparative advantage theory.At present,"following customers" is still the most important reason for Chinese banks'multinational business.Whether it is bilateral trade or China's outward foreign direct investment to host countries,it can significantly increase the willingness of Chinese banks to start business in the country.Secondly,the location advantage has an important attraction for Chinese banks'multinational operations.The more developed the financial market is,the shorter "geographical distance" and "psychological distance" is to China,the more attractive it is to attract Chinese banks to set up branches.In terms of ownership advantages,the profitability of Chinese banks is not as competitive in the international market,but the internationalization of the renminbi has created a new competitive advantage for Chinese banks' multinational business.Based on motivation research,this paper further analyzes the way for Chinese financial institutions to develop overseas business using a Comparative Study of ICBC and HSBC.It was found that,consistent with the financial institutions of developed economies,Chinese financial institutions' oversea business strategy has gone through the process of staying in their own countries and surrounding regions,entering the markets of European and American,finally entering emerging economies.At present,Chinese financial institutions' oversea business capabilities is still poor,and there is still a large gap in the scale and profitability of overseas businesses between financial institutions in china and developed economies.With the abundance of overseas experience of Chinese-funded financial institutions and the improvement of their business capability,it is expected that in the future,Chinese financial institutions will increasingly implement overseas operations based on the motivation of their own business development.The last chapter of the article also provides five practical recommendations to promote Chinese financial institutions' internationalization,including promoting overseas business with endogenous needs,establishing the company's cross-border M&A protection system,seizing the opportunity of economic and financial fluctuations,promoting the joint development of renminbi internationalization and the financial institutions' internationalization,and enhancing the economic and political strength of the country.