A note on foreign bank entry and bank corporate governance in China

Arbeitspapier

China employs a unique foreign bank entry model. Instead of allowing full foreign control of domestic banks, foreign investors are only permitted to be involved in the local banks as minority shareholders. At the same time, foreign strategic investors are expected to commit to bank corporate governance improvement and new technology support. In this context, the paper examines the effect of foreign strategic investors on Chinese bank performance. Based on a unique data set of bank ownership, performance, corporate governance and stock returns from 2003 to 2007, our regression and event study analysis results suggest that active involvement of foreign strategic investors in bank management have improved the corporate governance model of Chinese banks from a control based model to a market oriented model, and accordingly have promoted bank performance.

Object Details

• ISBN: 978-952-462-739-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BOFIT Discussion Papers ; No. 8/2012

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Multinational Firms; International Business
• Subject: China ; Foreign Market Entry ; Corporate Governance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hasan, Iftekhar ; Xie, Ru
• Event: Veröffentlichung
• (who): Bank of Finland, Institute for Economies in Transition (BOFIT)
• (where): Helsinki
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/212732
• Last update: 10.03.2025, 11:42 AM CET