The Impact Of The Entry Of Foreign Banks On The Chinese Banking Competition

Banking competition is a worldwide issue.There are some influential factors such as interest rate liberalization,Internet finance,etc.,which will have the great impact on the competition level in the banking market.Lots of previous researches have dug into the relationship between these factors and banking competition level in different countries.This dissertation will focus on the impact of the entry of foreign banks into the Chinese banking market on the Chinese banking competition.The Panzer-Rosse model will be used to research the impact of the foreign banks on Chinese banking competition during the period of 18 years,from 1998 to 2015.The year 2006 will be used as the turning point since in that year Chinese banking industry has entirely opened to foreign countries.Around 165 Chinese banks will be chosen in the sample including the Four Big banks in China.Whether the foreign banks have the impact on Chinese domestic banks can be figured out by comparing the H-statistic derived from data of two sub-samples and the whole sample.The Chinese banking industry is in monopolistic competition for a long time.From the experience of the previous researches,it is very likely that the Chinese banking competition will become more intense after the entry of foreign banks.This dissertation aims to use empirical analysis to prove this result.After getting the result of the research,several countermeasures should be proposed from the perspective of the Chinese government,domestic Chinese commercial banks,and foreign banks individually.