The Impacts of Foreign Bank Entry on Credit Scale and Business Structure of Chinese Commercial Banks

We employ a data set comprising 31 banks for the period 2002-2009 to investigate the impacts of foreign bank entry on credit scale and business structure in China. In this paper, foreign bank entry means the entry of both greenfield and strategic investment. The empirical results show that the foreign bank entry is not associated with the growth of credit scale, but significantly improves domestic banks’ business structure. Furthermore, the network and informational advantages are the main considerations of foreign banks when entering into China through the mode of “minority equity stake”.