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The Rise of Foreign Investment in China's Banks: Taking Stock

16 Pages Posted: 12 Jan 2007  

Richard Podpiera

International Monetary Fund (IMF); Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Lamin Leigh

International Monetary Fund (IMF)

Date Written: Janurary 2007

Abstract

The recent wave of foreign investment in China's banks and the prospects of further opening of the banking sector under the WTO agreement suggest that foreign banks are likely to play an increasingly important role in China. This paper takes stock of the involvement of foreign banks in the Chinese banking sector in the perspective of international experience. While in most other countries foreign bank entry took the form of direct takeover or majority shareholding, foreign investments in China's banks have been minority shareholdings with very limited management involvement. The paper concludes that China appears to be well positioned to benefit from further opening of the banking sector to foreign investors. International experience suggests that greater competition from and participation of foreign banks can in general bring important benefits if appropriate incentives and sufficient opportunities are created.

Keywords: Foreign investment, China, Banks, Bank reforms, World Trade Organization

Suggested Citation

Podpiera, Richard and Leigh, Lamin, The Rise of Foreign Investment in China's Banks: Taking Stock (Janurary 2007). IMF Working Papers, Vol. , pp. 1-14, 2007. Available at SSRN: https://ssrn.com/abstract=956756

Richard Podpiera (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
+42 02 240 05 242 (Phone)
+42 02 242 27 143 (Fax)

HOME PAGE: http://www.cerge-ei.cz

Lamin Leigh

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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