The Impact Of Foreign Strategic Investors On The Operating Performance Of My Country's City Commercial Banks

The process of financial opening in China has been accelerated in recent years.A slew of relevant policies and methods in this area has been produced while the banking industry has been performing continuous reforms.With the opening of the entry threshold for foreign institutions,foreign capital gets a free access to enter China's financial market which brings fresh blood as well as impacts to domestic financial institutions.This paper selects the city commercial banks which have relatively small assets scales and more flexible operation mode as research objects and analyzes the influence of foreign strategic investors on the operating performance.The paper is trying to provide some advice for domestic commercial banks to work out the next business strategy in the fully open market.The development of City Commercial Banks is based on the Economic Development of Urban Credit Cooperatives in the special historical period.The reform process for CCBs was slow and faced with huge resistance.In order to improve its comprehensive ability and competitiveness,some city commercial banks choose to exchange equity for capital,technology and mechanism.This paper used a quantitative method to study the effect that foreign strategic investors performs on CCB's business performance particularly on its safety and profitability.This paper expounded the theoretical basis in the first step and then gave a systematic review of the course and current situation of city commercial banks attracting foreign investment.Finally,this paper focused on 14 city commercial banks with foreign investment and 7 CCBs without foreign investment and established a panel regression model for empirical analysis based on relevant data of the past ten years(2008-2017).The results indicate that the introduce of foreign financial institutions investment can significantly enhance the asset quality and profitability of the city commercial banks.In particular,the NPL ratio of city commercia banks gets lower and ROE gets improved with the increase of shareholding ratio of foreign strategic investors.Higher ranking of foreign shareholders(based on shareholding ratio)among all the shareholders in the city commercial bank leads to a lower NPL ratio while this ranking index doesn't have a significant influence on ROE.The last chapter summarized the research results and put forward relevant suggestions.