The impact of foreign bank penetration on the domestic banking sector

new evidence from China

Dan Luo, Yizhe Dong (Corresponding Author), Seth Armitage, Wenxuan Hou

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This study proposes a foreign bank branch networks index (FBBNI) to capture bank-level exposure to competition from foreign banks in terms of geographical proximity. The index takes account of the rapidly expanding branch networks of both foreign and domestic banks in China. Based on data from a sample of three types of Chinese commercial banks from 2002 to 2011, we find that exposure to the branch networks of foreign banks is associated with improved profitability at domestic banks, higher efficiency, and increased non-interest income, consistent with knowledge transfer from foreign banks. These relationships are most pronounced for joint-stock domestic banks presumably because their ownership structure fosters knowledge transfer.
Original languageEnglish
Pages (from-to)752-780
Number of pages29
JournalEuropean Journal of Finance
Volume23
Issue number7-9
Early online date30 Jan 2015
DOIs
Publication statusPublished - 2017

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Penetration
Banking sector
China
Foreign banks
Knowledge transfer
Commercial banks
Geographical proximity
Non-interest income
Ownership structure
Bank branches
Profitability

Keywords

  • foreign exposure
  • bank performance
  • Chinese banking

Cite this

The impact of foreign bank penetration on the domestic banking sector : new evidence from China. / Luo, Dan; Dong, Yizhe (Corresponding Author); Armitage, Seth; Hou, Wenxuan.

In: European Journal of Finance, Vol. 23, No. 7-9, 2017, p. 752-780.

Research output: Contribution to journalArticle

Luo, Dan ; Dong, Yizhe ; Armitage, Seth ; Hou, Wenxuan. / The impact of foreign bank penetration on the domestic banking sector : new evidence from China. In: European Journal of Finance. 2017 ; Vol. 23, No. 7-9. pp. 752-780.
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