The Impact of Foreign Entry on Chinese Banks

Yuhua Li, Konari Uchida, Tongsheng Xu, Zhaoyang Wu

Research output: Contribution to journalArticle

Abstract

Utilizing hand collected data concerning foreign ownership in the Chinese banking sector, we examine whether foreign ownership improves the efficiency of Chinese banks. Foreign banks tend to provide cooperation in retail banking rather than in corporate or private banking. We find no robust evidence of an improvement in the efficiency of an average bank that receives foreign strategic investments. However, the bank cost and profit efficiency significantly improve when foreign strategic investments provide retail banking and internal control assistance respectively to local banks. These findings suggest that foreign investment improves local bank efficiency when it transfers technologies that are lacking in local banks.

Original languageEnglish
Pages (from-to)74-86
Number of pages13
JournalReview of Development Economics
Volume20
Issue number1
DOIs
Publication statusPublished - Feb 1 2016

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banking
bank
ownership
efficiency
technology transfer
foreign investment
cost
profit
assistance
costs
evidence

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development

Cite this

The Impact of Foreign Entry on Chinese Banks. / Li, Yuhua; Uchida, Konari; Xu, Tongsheng; Wu, Zhaoyang.

In: Review of Development Economics, Vol. 20, No. 1, 01.02.2016, p. 74-86.

Research output: Contribution to journalArticle

Li, Yuhua ; Uchida, Konari ; Xu, Tongsheng ; Wu, Zhaoyang. / The Impact of Foreign Entry on Chinese Banks. In: Review of Development Economics. 2016 ; Vol. 20, No. 1. pp. 74-86.
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