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Foreign Banks’ Entry and Local Banks’ Strategies in China

Foreign Banks’ Entry and Local Banks’ Strategies in China The opening of the Chinese banking sector encourages the entry of foreign banks through greenfield investment or cooperation with local banks. The entry strategies of foreign banks are therefore influenced by the strategies of local banks. This paper examines the interaction between local and foreign banks. The results demonstrate that the superior capabilities of foreign banks to liquidate collateral facilitate their greenfield investment. Otherwise, foreign banks will cooperate with local banks, whose cooperation depends on local banks’ self‐development capability. Our results suggest that foreign banks are more likely to cooperate with large local banks in China unless small local banks have greater self‐development capabilities. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Financial Studies Wiley

Foreign Banks’ Entry and Local Banks’ Strategies in China

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Publisher
Wiley
Copyright
Copyright © 2017 Korean Securities Association
ISSN
2041-9945
eISSN
2041-6156
DOI
10.1111/ajfs.12183
Publisher site
See Article on Publisher Site

Abstract

The opening of the Chinese banking sector encourages the entry of foreign banks through greenfield investment or cooperation with local banks. The entry strategies of foreign banks are therefore influenced by the strategies of local banks. This paper examines the interaction between local and foreign banks. The results demonstrate that the superior capabilities of foreign banks to liquidate collateral facilitate their greenfield investment. Otherwise, foreign banks will cooperate with local banks, whose cooperation depends on local banks’ self‐development capability. Our results suggest that foreign banks are more likely to cooperate with large local banks in China unless small local banks have greater self‐development capabilities.

Journal

Asia-Pacific Journal of Financial Studies – Wiley

Published: Aug 1, 2017

Keywords: ; ; ; ;

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