How foreign bank entry affect china’s economy? Evidence from banking sector and non-financial firm performance

Yue, Zhang (2020) How foreign bank entry affect china’s economy? Evidence from banking sector and non-financial firm performance. [Dissertation (University of Nottingham only)]

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Abstract

This paper is investigating the effects of foreign bank entry into China’s economy through financial and non-financial sectors. The domestic banking industry is selected to represent the financial sector whereas the classification of industrial enterprise from the National Bureau of Statistics of China is chosen as sample of a non-financial industry. The paper also further segregates each respective sector’s data into privately-owned firms and state-owned firms in order to determine the different impacts between them. The panel dataset is used in this paper, the sample duration on the financial sector is from 2007 to 2017, and non-financial sector is from 2009 to 2017. The paper utilizes GRETL techniques to measure the models.

As for the financial part, the paper found out that throughout the recent decade, the entry of foreign banks benefits both privately-owned and state-owned banks with their profitability while also helping banks on cost reduction through a competitive environment, advanced skills and resources brought about by foreign banks, thus the “spill-over” effect can also be seen in the China market. Findings also indicate that there is only a small difference on the effects of profitability between state-owned and privately-owned enterprises due to foreign bank entry.

As for the non-financial sector, results also show that foreign bank entry benefits both China’s state-owned and privately-owned enterprises’ profitability. However, it is clear that the privately-owned firms benefit more from this “open-up” policy than state-owned firms over the recent decade, although state-owned firms obtain more credit access, which is in line with Detragiache et al. (2008) and Lin’s (2011) studies. Overall, foreign bank penetration as well as a series of reforms in China bring about a good environment for development to China’s economy.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Zhang, Yue
Date Deposited: 27 Feb 2020 05:57
Last Modified: 06 May 2020 10:31
URI: http://eprints.nottingham.ac.uk/id/eprint/59023

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