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ID: 081897

Has minority foreign investment in China's banks improved their / Laurenceson, James; Qin, Fengming

Laurenceson, James	Journal Article
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2008.

Summary/Abstract

Since 2001, foreign investors have been permitted to acquire minority ownership stakes in China's banks. This paper assesses whether there is any evidence of a cost efficiency payoff in those banks that have taken on foreign investment. Data envelopment analysis is first used to generate measures of cost efficiency for China's banks over the period 2001-2006. A second stage regression is then performed to determine whether foreign investment has an impact on cost efficiency. The results indicate a positive relationship, although one that is not statistically significant. Policy implications are discussed

Key Words

China ; Foreign investment ; Banking ; Cost Efficiency

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ID: 140233

Impact of foreign bank presence on foreign direct investment in China / Ongena, Steven; Qi, Shusen ; Qin, Fengming

Qin, Fengming	Article
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Summary/Abstract

We analyze the impact of foreign bank presence on foreign direct investment (FDI) in China. The connection between the two could be particularly relevant for an emerging economy like China because the supply of financial services provided by banks may act as a constraining factor. Foreign bank presence may then enable and foster FDI and not simply result from it. Our estimates demonstrate that FDI across regions in China is increasing in the existing network of regional branches of foreign banks, which itself is driven (and, therefore, instrumented) by the timing of the regional phasing out of the local limits for foreign banks on local currency business. The effect of foreign bank presence on FDI is particularly strong for some specific sectors (farming, manufacturing, construction, transportation, wholesale/retail trade and real estate) if those sectors are strongly represented in the source economies.

Key Words

China ; Foreign Direct Investment ; Foreign Bank Presence

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