The Factors Influencing China’s Commercial Bank’s Overseas Investment Layout

As the banking industry accounting more and more shares in the global transnational activities, financial market tends to globalization accordingly. For all the China’s commercial banks, entering into the global market is the inevitable choice. Since the beginning of China’s reform and opening up policy, China’s commercial banks mainly followed the domestic enterprises’partners to do an overseas investment, which was called "following effect". After China’s accession into the WTO, with the development of commercial banks of China, they further expanded their overseas investment business and realized the strategic target for its global layout. However, in the process of implementing "going out" strategy we will also face many problems. Bank investment layout will be the key to the success of overseas investment of commercial banks of China. For strategic decision makers, it is necessary for them to know what factors should be considered to insure the success of commercial bank of China overseas investments. Therefore, the main factors affecting the commercial bank of China overseas investment layout need to be researched, so as to providing decision-making references for policy makers related.According to the literature references, the author found that most scholars has been focused on the research on the issue of those foreign banks entering into Chinese market, but few of them pay attention to the study of the China’ commercial bank’overseas investment problem. Data show that by the end of2012, the total number of China’s commercial banks’overseas investment financial institutions (including branches, subsidiaries, and representative offices) is the156. However, among which112is belonged to four domestic commercial banks of China (Which are BOC, ABC, ICBC, CCB) in41different countries (or regions),according to the year report statistics, which accounts for three-quarters of the total number. It is easy to be seen that BOC, ABC, ICBC, CCB altogether occupy the majority of the proportion of the market shares of the overseas investment of China’s commercial banks.To do a research on the BOC, ABC, ICBC, CCB has strong representative.At first, this author respectively introduces the paper’s research background, research purpose, research significance, research methods, contents, framework and points out the research innovations and deficiencies at the same time. The innovations of this article are mainly reflected in the following aspects:first, few people do researches on this topic. Second, this paper uses the latest panel data and establishes multiple linear regression models, which is more persuasive. Third, the author has collected China’s largest four commercial banks worldwide investment layout data by the end of2012, which could provide reference for later scholars’ study. The shortcomings of this article mainly include the followings:first, individual years’data miss. Second, total sample size are not large enough. Third, the cross section is not detailed enough. All of these factors have an effect to the accuracy of the paper, hope that other scholar can do further research on the same topic.The second part of this article discusses the main theories that are used, which are Aliber’s (1976) Trade Lead Efficiency Theory and Dunning’s (1977) International Production Compromise Theory (known as OLI theory) of, and based on which review scholars’achievements on the influence factors of commercial banks overseas investment layout research. To summarize, the influencing factors of commercial banks’overseas investment layout can roughly be divided into three categories according to the past scholars study:internal factors, external factors and other factors. Then separately summarizes the influencing factors of foreign banks to enter the Chinese market, there is a brief comment on previous scholars research of the author at the end of this part.The third part of this article is a review of the process and the current situation for the commercial bank of china overseas’investment, which provide a premise to the following research. In order to represent the history more clearly, the author put the process overseas’investment of China’s commercial banks roughly into three stages:early stage-before the reform and opening up of China; exploring stage-since the reform and opening up to China entering into WTO; development stage-after china entering WTO. On the basis of summarizing the process, the author focus on BOC, ABC, ICBC, CCB as examples analyzes the overall status of the commercial bank of China overseas investment layout, which lay the foundation for later analysis.The empirical part of this paper is the core of this article. In this part, the author first establish the hypothesized model on the basis of the existing literature, for the reason of the availability of the data, the author uses commercial institutions’(including branches, a row and representative offices) number of China’s largest four commercial banks (BOC, ABC, ICBC, CCB) of in the selected15of the host countries (or regions) from2001to2011as explanatory variables, using per capita GDP, the total bilateral trade, the foreign trade dependency and the FDI(China for the host country or region) as explained variable. After the unit root test and co-integration test, by the varying coefficient model, variable intercept model regression, mixed estimate regression to do panel data model analysis, and draw the F statistic values, finding that variable coefficient regression model is most suitable for this paper. Conclusion comes from variable coefficient model regression. According to the result, per capita GDP of the host country (or region), the total bilateral trade, the foreign trade dependence, to the host country (or region) and FDI(China for the host country or region) are positively correlated with the commercial bank of China overseas investment layout. At the same time, through the analysis, research finds that Hong Kong, Japan, South Korea and UK are the first big key markets of China’s commercial banks; the second key markets are Singapore, Australia, Germany, Russia, Indonesia, Brazil, and South Africa, the last category is Kazakhstan, Luxembourg, United States and Canada.At the end of this article the author put forward some policy suggestions:As policy makers and practitioners, the government should work harder on strategic planning and policy implementation to improve the comprehensive competitiveness of China’s commercial bank internationalization and promote rapid development of China’s commercial banks’"going out" strategy.