A note on foreign bank entry and bank corporate governance in China
Hasan, Iftekhar; Xie, Ru (27.04.2012)
Numero
8/2012Julkaisija
Bank of Finland
2012
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201408072137Tiivistelmä
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. JEL Classification Code: G21, G28, G34, F23 Keywords: China, Foreign Market Entry, Corporate Governance
Julkaisuhuomautus
Published in Emerging Markets Finance and Trade, Volume 49, Issue 2, 1 March 2013, Pages 4-18 as Foreign bank entry and bank corporate governance in China