Analysis Of The Impact Of The Establishment Of Overseas Institutions Of Chinese Banks On China's OFDI

Finance plays an important part in supporting Belt and Road project.Most of the countries along the Belt and Road route have a relatively weak economic foundation and financial system,so it is difficult to meet the capital needs of non-financial Chinese enterprises if only rely on the domestic financial resources of the host country.Therefore,Chinese financial institutions are important on supporting Belt and Road project.In recent year,Chinese policy banks and Chinese commercial banks became important part in providing funds for the Belt and Road project.In this case,it became important to research how to increase the quantity of Chinese bank's oversea branches and how to improve its service ability to going out Chinese enterprises on Belt and Road countries.The research purpose is studying the impact of Chinese banks opening branches in Belt and Road countries on China's OFDI.Through literature research,mechanism analysis and current situation analysis,this research fully studies the motivation of Chinese banks to set up branches in countries along the Belt and Road and problems they meet.The thesis also did empirical test using the data of 64 countries along the Belt and Road route from 2003 to 2018 to exam the promoting effect of overseasbranches of Chinese banks on the OFDI of Chinese enterprises,and also the promoting effect of bilateral local currency swap agreements on Chinese banks branches.The study found that the overseas branches of Chinese banks significantly promotes the OFDI other Chinese enterprises in Belt and road countries.The bank credit is relatively backward in Belt and Road countries.Based on the strong capital support of parent companies,oversea branches helped a lot to give fund on Chinese companies' OFDI.It is easier for Chinese company getting fund from oversea branches because of their cooperate foundation.Chinese bank oversea branches also helped on cash management and finding high quality investing project.The results of empirical also showed the establishment of branches of Chinese banks along the Belt and Road can indeed promote China's OFDI.Meanwhile,the bilateral currency swap agreement has a significant promotion effect to bank's oversea branches,for the high exchange-rate risks the Chinese bank will meet in Belt and road countries.Bilateral local currency swap agreements can also bring a certain amount of RMB business to overseas institutions of Chinese banks,and play a supporting role for overseas branches whose business volume is still small and development is still in its infancy.On the basis of the research conclusions,this article puts forward the following policy recommendations.First,encourage Chinese banks to set up overseas institutions,and accelerate the coverage of countries that do not yet have overseas institutions of Chinese banks.Second,overseas institutions should be encouraged to enrich their business and enhance their service capacity.Third,strengthen cooperation between bilateral governments in the supervision of financial institutions and the sharing of credit information,so as to optimize the business environment of overseas institutions.Fourth,promote the signing of bilateral local currency swap agreements between China and the countries along the route and further expand the scale of swaps.