The Influence of Foreign Equity Participation on the Profitability of Chinese Commercial Banks: Multi-perspective Research Based on Banks, Industry, Macroeconomics

Abstract

With the deepening of China's banking industry's opening to the outside world, the influence and penetration of foreign strategic investors in China are gradually increasing. In this context, this paper uses unbalanced panel data of 111 Chinese commercial banks from 1996 to 2017 to analyze the impact of foreign equity participation on the profitability of Chinese commercial banks from multiple perspectives, including banks, industries and macroeconomics. The results show that the profitability of Chinese commercial banks is proportional to the proportion of foreign equity participation. Among multiple variables, variables such as Capital, Credit risk, Operating expenses management, and Inflation expectations have an impact on the profitability of Chinese commercial banks. Through the analysis of different types of banks, The results show that in joint-stock commercial banks and city commercial banks, bank profitability is proportional to the proportion of foreign equity participation.