The Empirical Study On The Efficiency Of Chinese Banking After Foreign Banks Entry

After China’s entry to WTC, foreign banks’ impacts on China local banks areincreasingly obvious. China banking is faced with grand challenges. Chinese bankshave to compete with foreign ones after Chinese government cancelled all the limitsof foreign capital. The inexperience and lacking in technology of China banking isdisadvantageous to the improvement of operating efficiency. Therefore, it’s especiallyimportant to explore the impacts of foreign banks’ entry on Chinese local banks’operating efficiency.This paper firstly analyzes and reorganizes the relevant theories andempirical researches of experts and scholars at home and abroad, then systematicallyanalyzes the theoretical basis of foreign banks’ entry, as well as the factors impactingthe effect of foreign banks’ entry according to researches of experts and scholars athome and abroad,. At last it analyzes emphatically the impact of foreign banks’ entryto China banking. The corresponding countermeasures and suggestions are put upaccording to the empirical results.This paper mainly analyzed the panel data of15representative Chinese banks,and the selected time period was2003-2012，and applying Eviews6.0EconometricSoftware. As it is shown with empirical results that the entry of foreign banks hassome impact on domestic banks’ traditional business but the effect on the efficiencyof Chinese banking business after foreign banks entering does not entirely fithypothesis according to the classical theory, for the pre-tax profit margin, net interestincome rate which are on the contrary of the assumption, while the influence of theimpact on operating expense ratio according with theoretical analysis. This paperseparately analyzed the influence to China’s large commercial Banks and small andmedium-sized commercial Banks after foreign banks entering, the conclusion is thatpromoting effect is different, the bigger the scale, the more obvious promoting effect.For the operating cost, large commercial bank has not suffered significantly, while thesmall and medium-sized banks operating costs are increased obviously.Finally, on a basis of the structures of the theories and empirical analysis, thisthesis proposes reasonable policies and suggestions: A favorable external environment,wholesome supervision system, promoting non-governmental capitals to enterbanking market and many other aspects must be created for China banking.