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All in all, all those literatures have indicated showing the right effective model for the factors influencing the foreign bank entry. The banks which develop businesses only in its motherland will gain less profit with a small scale than those cross country banks. So in turn, banks that are engaged in the FDI should be developed into larger banks, which will make more profit. And as we all know, it will require high fixed costs if a bank wants to enter the foreign banking market, so it is advisable for the bank to absorb and take advantage of the FDI.

2.3 Researches of banking industry in China

After adopting the policy of the ‘open-door’ in late 1978, the rapid FDI inflows expansion has appeared in China. One of the strategic economic policies adopted in China is to attract FDI, which is used to boost economic growth and upgrade technology. By the end of 2000, more than 364,345 foreign companies are approved in China, which has absorbed 535 billion dollars in 2003 and become the largest recipient of FDI. For China, FDI has played a critical role in the process of economic growth. Many researchers had paid attention to the FDI’s effect on China’s development (Yao, 2006; Banerjee, 2006; Zhou and Lall, 2005; Zheng et al., 2004; Ng and Tuan, 2003; Park and Lee, 2003; Zhang and Felmingham, 2002).

Neeltje Van Horen (2007) has analyzed the phenomenon of foreign banks entry in developing countries. Through discussing the similarities and differences between high income and developing country foreign banks. They have found that in developing countries, 27% of foreign banks are possessed by the bank from other developing country, which will hold 5% asset. It is more important to establish foreign bank in developing country than the low-income country.This kind of foreign banking is regionally concentrated.So the developing country banks own the competitive advantages when dealing with counties owns weak supervisor climate.Besides, the developing country banks have less profitable and higher interest margin than the developed country’s international banks.

After the entrance of Chinese banking market, foreign banks are allowed to build a commercial presence in four ways: wholly owned foreign banks, foreign bank branch, foreign strategic investment and joint ventures. Among these methods, wholly owned foreign banks, joint venture and foreign banks branch are defined as foreign banks in China and subject to the special regulations and rules governing foreign banks. Foreign equity investment or foreign strategic investment is a main form of foreign entry in Chinese banks. But currently, foreign investors can only gain minority ownership in domestic banks, which are still Chinese banks and obey the rules governing Chinese banks.

Some scholars believe that the entry of foreign banks will improve the competitiveness of the host country studied, and thus encourage domestic banks to improve operational efficiency. Waterhe Gray (2002), Gelb and Sagry (2006) that the entry of foreign banks can improve the efficiency of the banking sector allocation of resources to enhance competition in the banking sector to accelerate the use of advanced financial techniques to improve the quality of the local bankin本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。