Impact of Foreign Bank Entry on the Performance of Chinese BanksChung-Hua Shen, Chin-Hwa Lu and Meng-Wen Wu China & World Economy, 2009, vol. 17, issue 3, pages 102-121 Abstract: This study investigates how foreign bank/investor penetrations influence local bank performance in China. At the country level, foreign bank penetration is proxied by MacroFP, measured by the percentage of banks with foreign strategic investors (FSI) among total banks. At the bank level, foreign bank penetration is proxied by MicroFP, measured by the percentage shareholding of FSI in a bank. When foreign bank penetration is proxied by MacroFP, it is found to improve the profitability of local banks but not to reduce costs. Next, when foreign bank penetration is proxied by MicroFP, it is found to affect neither profitability nor costs. In sum, the present study demonstrates that the opening-up policy is correct from a macro perspective. However, for banks that have introduced FSI, determining the reasons for improvements in performance being inhibited is more important than releasing more shares to foreign investors. Copyright (c) 2009 The Authors Journal compilation (c) 2009 Institute of World Economics and Politics, Chinese Academy of Social Sciences. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:bla:chinae:v:17:y:2009:i:3:p:102-121 Ordering information: This journal article can be ordered from Access Statistics for this article China & World Economy is edited by Yongding Yu More articles in China & World Economy from Institute of World Economics and Politics, Chinese Academy of Social Sciences |
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