The Moderate Level of Foreign Banks’ Entry—Based on the Analysis of Shanghai Free Trade Zone

Abstract

After the establishment of Shanghai Free Trade Zone, the effect of foreign banks’ entry on the efficiency of domestic commercial banks in China has become more evident. Choosing the first 7 domestic banks in Shanghai Free Trade Zone as study subjects this paper uses the double-effect model to confirm the existence of the moderate level of foreign banks’ entry .At the same time, with the cross items of foreign banks’ market share and owner structure (FORO), foreign banks’ market share and zone(FORZ), this paper found that when compared with joint-equity banks, the large state-owned commercial banks are found to be the quickest to enhance safety and there is no difference from whether the headquarters of domestic commercial banks are in the same place as Shanghai Free Trade Zone.