Entry of foreign banks in Shanghai: Implications for business strategies in an increasingly competitive market

M. K. Leung, T. Young

Research output: Journal article publicationJournal articleAcademic researchpeer-review

10 Citations (Scopus)

Abstract

This paper uses a simple mean-variance choice model as the basis of a duration analysis of the factors determining the decision of a foreign bank to establish a branch in Shanghai, the fast developing financial centre in China. Bank attributes, namely region of origin, parent bank size, the number of international branches and their branch network in China, have a significant impact on the time to entry. A country's share of total foreign direct investment in Shanghai also significantly affects the entry decision. The attributes facilitating entry also provide the foreign bank with a competitive advantage in its foreign currency transactions in Shanghai. However, with the ensuing market liberalisations after China's WTO accession, the entrants' competitiveness may not be sustained in the local currency market, especially following the proactive business strategies of Chinese banks and the protectionist measures of the government. It is expected that only a small number of the entrants will be able to emerge as big market players in the growing domestic currency market in Shanghai.
Original languageEnglish
Pages (from-to)387-395
Number of pages9
JournalManagerial and Decision Economics
Volume26
Issue number6
DOIs
Publication statusPublished - 1 Sep 2005

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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