Foreign bank entry and bank corporate governance in China

Iftekhar Hasan, Ru Xie

Research output: Contribution to journalArticlepeer-review

30 Citations (SciVal)


China employs a unique foreign bank entry model. Instead of allowing full foreign control of domestic banks, foreign investors are only permitted to be involved in the local banks as minority shareholders. At the same time, foreign strategic investors are expected to commit to bank corporate governance improvement and new technology support. In this context, this paper examines the effect of foreign strategic investors on Chinese bank performance. Based on a unique data set of bank ownership, performance, corporate governance, and stock returns from 1997 to 2010, our regression and event study analysis results suggest that active involvement of foreign strategic investors in bank management has improved the corporate governance model of Chinese banks from a control-based model to a market-oriented model, and accordingly has promoted bank performance.

Original languageEnglish
Pages (from-to)4-18
Number of pages15
JournalEmerging Markets Finance and Trade
Issue number2
Publication statusPublished - 1 Mar 2013


  • China
  • corporate governance
  • foreign market entry

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)


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