A Study Of The Impact Of Foreign Banks' Entry Upon The Efficiency Of Chinese Banks

China's banking industry has been opened in all rounds to the world after Dec. 11^th, 2006, which means the competition between foreign banks and domestic banks is becoming fiercer. This thesis starts with an introduction to the development of foreign banks in China and then goes on with a study of the impact of foreign banks on the efficiency of the domestic banks with panel data. Based on the conclusion of this study some suggestions are made for the domestic banks to compete with foreign banks.The thesis is divided into five chapters.The first chapter is introduction. This chapter introduces the background and significance of this study. It puts forward the research direction, i.e. did the foreign banks' entry help Chinese domestic banks improve their efficiency? Do they have the same impact on the efficiency of state-owned commercial banks and joint-stock commercial banks? When the foreign banks purchase the share of domestic commercial banks, do they impact on the efficiency of Chinese banks more obviously? In addition, it states the research design and research approach as well as the innovations and drawbacks of this thesis.The second chapter is the comments on the literatures about the Impact of Foreign Banks upon the Efficiency of Host-country's Banks. The study made by foreign and domestic scholars provides the theoretical basis and significant reference for this thesis.The third chapter is the development of foreign banks in China. This chapter reviews foreign banks' business development and customer development in China, the trend of increasing purchasing share of domestic commercial banks, which is preparing for empirically analyzing the impact of foreign banks' entry on the efficiency of Chinese banks.The fourth chapter is the empirical analysis on the impact of foreign banks' entry on the efficiency of Chinese banks. This chapter uses the model of Classens S. & Demirguc-kunt A. & Huizinga H. (2001) for reference, presenting a model to analyze the impact of foreign banks on the efficiency of the state-owned commercial banks and the joint-stock commercial banks as well as the impact of foreign banks' purchasing share of domestic commercial banks on the efficiency of domestic banks by using panel data, which reaches a conclusion that foreign banks really have different impact on the efficiency of the state-owned commercial banks and the joint-stock commercial banks. When the foreign banks purchase the share of domestic commercial banks, they spill over the technology more quickly and obviously.The fifth chapter proposes suggestions for the domestic banks to compete with foreign banks based on the previous empirical results.