Resident¡¯s comparative assessment on domestic versus foreign financial institutions: Evidence from nine cities in China

Tao Li (), Xingqiang He and Kaiguo Zhou
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Tao Li: School of Finance, Renmin University of China, Beijing 100872, China
Xingqiang He: Lingnan College, Sun Yat-sen University, Guangzhou 510275, China
Kaiguo Zhou: Lingnan College, Sun Yat-sen University, Guangzhou 510275, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2009, vol. 4, issue 1, 76-96

Abstract: Between domestic financial institutions and foreign or joint venture ones in China, which ones do Chinese people give better assessment to? And what factors affect those comparative assessments? With a household survey in nine cities in China in 2006, we find that China¡¯s domestic financial institutions are considered better than foreign or joint venture ones in terms of financial products, communication with investors, security and prudence, operation standardization and service attitudes. When taken into account the endogeneity of people¡¯s trust on government regulation agencies, empirical results show that people¡¯s more attention to returns or the more trust on government regulation agencies leads to their better assessments on domestic financial institutions than foreign or joint venture ones. The policy implications are: Chinese governments have to take measures to improve residents¡¯ trust in governmental regulation and create a fair competition environment for domestic and foreign financial institutions in China. Domestic and foreign financial institutions make efforts to develop a higher rate-of-return and attractive financial products to service more customers.

Keywords: Chinese-owned financial institution; foreign financial institution; rate of return on capital; trust (search for similar items in EconPapers)
JEL-codes: G20 G28 Z13 (search for similar items in EconPapers)
Date: 2009
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