The impact of local banking structure on foreign bank expansion: evidence from China

Xifang Sun and Tianjian Yang

Applied Economics Letters, 2025, vol. 32, issue 4, 449-453

Abstract: Using data from foreign banks in China, we examine how banking structure affects foreign bank expansion. We find that: large banks compete more fiercely with foreign banks, so foreign banks tend to expand in cities where the share of large banks is low. Banking structure impacts foreign banks more strongly when their funding cost is higher and their information asymmetry is greater. The findings provide a new perspective on banking openness from the host country’s banking competitive environment.

Date: 2025
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DOI: 10.1080/13504851.2023.2274379

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