Towards a more accurate measure of foreign bank entry and its impact on domestic banking performance: The case of China

Ying Xu*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    60 Citations (Scopus)

    Abstract

    This paper examines the impact of foreign bank entry on China's banking performance. An innovation in this study is that it constructs a spatially disaggregated measure of foreign bank presence, employing location data of foreign bank branches. Using this measure, the study examines the relationship between foreign bank presence and domestic banking performance in China. The results show that the spatially disaggregated measure not only improves the assessment of the impact of foreign bank presence but also resolves unexplained discrepancies found in existing empirical studies contingent on aggregate measures. Importantly, the study provides strong empirical evidence that foreign bank entry is supportive of a more competitive and efficient banking industry in China.

    Original languageEnglish
    Pages (from-to)886-901
    Number of pages16
    JournalJournal of Banking and Finance
    Volume35
    Issue number4
    DOIs
    Publication statusPublished - Apr 2011

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