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Does the Chinese banking system benefit from foreign investors?

Alicia Garcia-Herrero and Daniel Santabárbara
Authors registered in the RePEc Author Service: Alicia Garcia Herrero

No 11/2008, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: We find empirical evidence that the Chinese banking system has benefited from the entry of foreign investors through higher profitability and increased efficiency of the banking system. Foreign participation, which consists of a minority stake in a Chinese bank (in con-trast to the typical pattern in emerging countries), appears to be most effective when the foreign bank acts as a strategic investor. Purely financial investors contribute little, if any-thing, to bank performance.

Keywords: China; banking system; foreign participation (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2008
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