Dissertation - Fdi Impact on Chinese Banks

Topics: Bank, Commercial bank, Banking Pages: 29 (10008 words) Published: July 23, 2011
Key Words: FDI, Chinese retail banks, Chinese banks strategy, emerging countries, banking market share, Revenue and Profits, impact.

In contemporary social and with the world econo006Dy expand. It has produced a great number of multinational banks, those banks in order to achieve more profit, they expand and develop to emerging countries, which is called foreign direct investment (FDI). So, in this report, in order to much better understand some information about FDI, especially FDI impact of foreign retail banking investment in China on the commercial performance Chinese retail banks. Besides, by using Chinese bank industry as a example. In this research, these can be broken down into four broad categories: one is reasons for foreign retail banks to come to emerging countries such as China? Another factor is foreign banking investment impact on Chinese banks' performance. Following is FDI impact on banking market share. And lastly is FDI influence on banking industry’s revenue and profits. In addition, above these four elements are penetrated into every chapter, like Chapter 1--literature review, it is discussion of relevant existing academic literature about impact of foreign retail banking investment in China on the commercial performance Chinese retail banks. And chapter 2--research design section, it is rationale for the chosen method and details of the procedures adopted on impact of foreign retail banking investment in China on the commercial performance Chinese retail banks. Moreover, chapter 3--results and findings section. It is making a conclusion on this research by using some relevant data and information. Last, chapter 4--discussion and analysis of findings section. It is relating them to the academic literature discussed earlier on Impact of foreign retail banking investment in China on the commercial performance Chinese retail banks. Here is a basic concept of china’s banking system and foreign banking entry. China’s Banking System:

In China, four kinds of commercial banks are existing, each one is different in terms of features associated with geographic branch coverage and its size. 1) The largest ones are known as State-owned banks, according to the figures in 2008 the five State-owned banks has more than half (52.1%) of the total commercial banking assets. These banks have branches in all cities across china that cover most of the big cities in the country. The second largest ones are the Joint-stock banks, altogether assets of the 12 banks forms 14% of the total banking assets. In start, they were building regional branches in specific regions mostly along the seashore. With the passage of time, these networks have increased dramatically and now most of them are having national coverage. The study is using regional and national banks representing Joint-stock and State-owned banks consequently to emphasise on their geographical location differences. Conversely, there are numerous numbers of rural credit cooperatives and city banks that are comparatively small in size from State-owned and Joint-stock banks. These banks operate city or town based and offer area-specific and limited services.

Foreign Banking Entry:
Allowing foreign banks to enter into Chinese market is a major challenge. Traditionally, the foreign banking entry was controlled by the government by putting so many restrictions. The entry requirements were minimum total assets, previous presence in china and minimum entry capital. There were some other constraints including customer type, currency denominations and geographical location. For example, foreign banks were allowed to operate in only two cities in China before 2001 and were allowed to do business with foreign companies and individuals of the specified cities only. At the end of 2001, when China agreed to the World Trade Organization (WTO) restrictions on foreign banks have massively reduced. Over five years after WTO accession, geographical and customer type...
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