Panel Data Model of Random Effects between Commercial Banks and Foreign Banks
|School||Ocean University of China|
|Keywords||panel data stochastic frontier analysis foreign banks bank efficiency|
Entering the WTO,China promised completely opening financial market , for every customer and at everywhere, to all foreign banks by 11Dec2006. Turning from offices and branches to independent legal entities, the form of many foreign banks improved a lot in these 5 years. While the strategy melting to fit the Chinese financial market, they start to set their branches at inland cities, even opening rural bank at suburban countries. Foreign banks have started to adapt our physical environment, from high-end deposit and loan business to the general all-out deep roots, increasing the number of cross-scale while continuing to develop in depth. With long history, rich heritage and lots experience, the entry of foreign banks have become a serious challenge to the development of China’s banking industry. Therefore, the study of foreign banks into the banking sector on the performance of Chinese commercial banks is of great theoretical and practical significance, which is important to take advantage of opportunities to improve the performance of commercial banks and deepen the reform of China’s banking industry to safeguard the healthy development of the banking sector.This paper reviews the relevant economics, financial, industrial organization principles, while using the normative and empirical method. Based on the history and present situation of the foreign banks in China, it analysis’s impact of the foreign bank entry on commercial bank performance theoretically. While using stochastic frontier function to measure the performance of commercial banks, and on this basis, using the panel data regression methods to detail the performance of commercial banks of various factors. Main tasks are as follows:(1)Doing in-depth study on the theoretical basis related to the theory from the industrial organization theory, theory of multinational banks and foreign bank entry on the host country point of view of economic theory. Combining the traditional theory of industrial organization, new theory of industrial organization, it analysis the foreign banks operating theory, policy analysis, and theoretically elaborated on the host country of foreign banks into the banking sector. In this process, the related home and abroad researches are reviewed.(2)Defining the scope of foreign banks, it describes the history of the development in China. Besides, it describes the development state of foreign banks in our country.(3)Based on the analyze the basic path of foreign banks impacting on China’s commercial banks, it analyzes the entrance of foreign banks bringing beneficial and adverse effects on Chinese banks, combing the property rights system, financial innovation, market competition and cooperation separately,(4)Summarizing indexes of commercial banks performance based and the method of calculating the performance, the paper selects 13 of China’s major commercial banks form 2003 to 2009 to measure their performance. The steps are detailing the concept of performance, indexes and the immurement methods, selecting the index input output variables and the method of SFA, and measure the performance of the 13 banks year by year, by Frontier4.0, which is preparing for the empirical study of the size of all the factors.(5) Based on 2003-2009 13 major banks in China panel data and using Eviews6.0 regression analysis software, it calculates their efficiency. It gets the level of foreign bank entry threshold of the regression parameters, while testing the model at last.(6)Putting forward the corresponding policy recommendations on macro, industry and the banks themselves, it looks for taking full advantage of the positive effects caused by foreign banks to the efficiency of commercial banks in China.