Dissertation > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods

Foreign banks to enter the empirical research on the impact of bank efficiency

Author ZhuFeiFan
Tutor MengLingJie
School Nanjing University of Technology and Engineering
Course Finance
Keywords bank efficiency DEA analysis foreign bank entry panel data
CLC F224
Type Master's thesis
Year 2012
Downloads 194
Quotes 2
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Since the reform and opening up, China’s financial market has developed rapidly, as the core role of the financial market, bank industry is in a process of self-improvement, on the other hand, accelerate the steps of introducing foreign capital. Foreign banks got the advantages of asset quality, technology products, mode of operation and management, all of these can get a profound impact on the efficiency of Chinese banking industry.In this situation, the article reviewed the domestic and foreign related research about foreign bank’s entry. The development and management situation of foreign banks in our country are analysed. From a theoretical point of view, this paper explains the positive impact and the passive impact on efficiency of domestic commercial banks after the entry of foreign banks into China.The paper uses the VRS model of DEA approach to measure the efficiency of 12 Chinese commercial banks from the year 1997 to the year 2010. The result shows that, after joining the WTO, the overall efficiency values are higher than before, and the state-owned bank efficiency fluctuation amplitude is smaller than the joint-stock bank. Based on the panel data regression, the paper researched the influences of foreign bank entry on China Banking efficiency. The results show that, the entry of foreign capital improved the efficiency of domestic banks, especially for the joint-stock banks. On the analysis of the pathways of foreign influence, we found that, foreign capital did not increase domestic banking sector interest income significantly, market competition effect is not obvious, but it has a slight positive impact on non-interest income, operating costs and the degree of innovation. So the foreign banks enter China without breaking the low efficiency of competitive state in Chinese bank industry. The foreign banks can’t play a positive role in China’s banking industry.Accordingly, some policies are put forward in this paper to make sure the foreign banks enter the Chinese financial market properly. First of all, the Chinese government should accelerate the rate of multi-business change of the banks. In addition, the reform of state-owned banks should focus on optimizing the structure of the company, while the joint-stock banks should take the advantage of its own, strengthen the business innovation capability, forming a sound banking system.

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