The Research On The Factors Affecting The Location Choice Of Outward Foreign Direct Investment In China's Banking Industry

As China's economy continues its fast growing,Chinese banking industry is also changing rapidly after China's reform and opening up.From the reform of unit banking system to the established institutional system,Chinese banking industry has displayed their own strategy superiority diligently.It includes the establishment and improvement of a complete operational mechanism and regulatory system,as well as the continuous improvement of its comprehensive strength and international influence.With the gradual popularity of the Internet and the continuous improvement of the Chinese economy in the international status,China has been becoming more and more important in international market.The development of China's banking industry presents several new features,as follows:innovation and diversification of financial products and multiple streams of income.Under this context,as called for by the national policies such as going-out strategy and One Belt and One Road strategy,Chinese banking industry has established branches by mergers or acquisitions or new investment methods all over the world.There is practical significance to study the factors which affecting the location choice of outward foreign direct investment in China's banking industry.First of all,this paper firstly summarizes the relevance theory and then summarizes the process and characteristics of outward foreign direct investment in China's banking industry,thus determines the theoretical basis of this paper.Based on the characteristics of overseas expansion of China's banking industry,this paper proposes the factors which influence the location choice of outward foreign direct investment.The main factors are as follows:bilateral trading tie,market size of the host country,whether there is an international financial center in the host country and geographic distance and other factors.Secondly,by using the software called STATA15.1,this paper selects the data from 18 countries as research objects and using panel data from 2006 to 2016,and uses unit root test and OLS method to do the regression analysis.After the regression analysis,it summarizes the effects of explanatory variables and provides empirical research support for the whole article.The study found that overseas investment of China's banking industry is still in start-up stage.In the location selection process,it will be affected by the factors of home country,host country and banks themselves.Among them,there is a significant positive correlation between the number of overseas branches and bilateral trade volume,foreign direct investment stock,per capita GDP,political stability and absence of violence/terrorism,regulatory quality and the existence of international financial center.There is a significant negative correlation between the number of overseas branches and geographical distance from China and the host country.And there is a positive correlation between amount of overseas branches and GDP growth rate and the rule of law in the host country,but the results are not significant.There is a negative correlation between amount of overseas branches and voice and accountability and control of corruption,but the results are not significant.Finally,on the basis of empirical study,this paper proposes relevant policies and recommendations for the location choices of outward foreign direct investment in China's banking industry from the two aspects:government and bank levels.