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The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks

Received: 4 May 2017     Published: 4 May 2017
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Abstract

Chinese banking industry speeds up the process of internationalization as the global economy integrates and Chinese government accelerates the going out strategy. Many Chinese commercial banks explore overseas market by setting up new branches or merge and acquisition. Under the background, this paper uses empirical study to analyze the relationship between the degree of banks’ internationalization and business performance. Firstly, principal component analysis is applied to measure the degree of banks’ internationalization. Then, the paper constructs two models to analyze the panel data of five state-owned commercial banks, the second one with financial crisis as dummy variable. The results indicate that there is a U-shape relationship between the degree of banks’ internationalization and business performance in the first model without dummy variable. In the second model adding dummy variable, the financial crisis not only deteriorates Chinese commercial banks’ performance, but also makes the relationship between degree of internationalization and business performance become negative in 2008 while the degree of internationalization has positive influence on operational performance in years except for 2008.

Published in Journal of Finance and Accounting (Volume 5, Issue 3)
DOI 10.11648/j.jfa.20170503.11
Page(s) 87-95
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

The Degree of Internationalization, Business Performance, Financial Crisis

References
[1] Errunza, VR & Senbet, LW 1984, ‘The effects of international operations on the market value of the firm: theory and evidence’, The Journal of Finance, vol.36, pp.401-417.
[2] Michel, A. & Shaked, I 1986, ‘Multinational corporations vs. domestic corporations: financial performance and characteristics’, Journal of International Business Studies, vol.18, pp.89-100.
[3] Collins, JM 1990, ‘A. market performance comparison of u. s. firms active in domestic developed and developing countries’, Journal of International Business Studies, vol.21, pp.271-287.
[4] Capar, N. & Kotabe, M. 2003, ‘The relationship between international diversification and performance in service firms’, Journal of International Business Studies, vol.34, pp.345—355.
[5] Ruigrok, W, Amann, W, & Wagner, H. 2007, ‘The internationalization- performance relationship at swiss firms: a test of the s-shape and extreme degrees of internationalization’, Management International Review, vol.47, pp. 349-368.
[6] Junyun, Q. 2011, ‘Research on relationship between degree of internationalization and enterprise performance in China from a resource perspective’, Master paper, Beijing Jiaotong University.
[7] Meng, H, Jian, Q. & Wendong, X. 2011, ‘The internationalization of Chinese banks: status and strategy selection’, The Banker, no.11, pp.67-69.
[8] Ting, L. & Delian F. 2012, ‘Empirical study on the relationship between internationalization and business performance of Chinese manufacturing companies’, Journal of Yunnan Finance & Economics University, vol.27, no.3, pp. 94-100.
[9] Lingyu, M. 2013, ‘Empirical study on factors affecting Chinese commercial banks’ business performance’, Journal of Finance and Economics, no.02, pp.55-58.
[10] Haixi, J. & Ying, J. 2014, ‘Study on the internationalization development stages of China’s state-owned commercial banks’, Economic Perspectives, no.08, pp. 90-96.
[11] Dong, C. & Jianhan, W. 2016, ‘The internationalization strategy of private enterprises, heterogeneous of investors and firm performance’, Journal of Shanxi University of Finance and Economics, vol.38, no.4, pp.74-86.
Cite This Article
  • APA Style

    Tingting Wu, Yanbin Wu. (2017). The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks. Journal of Finance and Accounting, 5(3), 87-95. https://doi.org/10.11648/j.jfa.20170503.11

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    ACS Style

    Tingting Wu; Yanbin Wu. The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks. J. Finance Account. 2017, 5(3), 87-95. doi: 10.11648/j.jfa.20170503.11

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    AMA Style

    Tingting Wu, Yanbin Wu. The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks. J Finance Account. 2017;5(3):87-95. doi: 10.11648/j.jfa.20170503.11

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  • @article{10.11648/j.jfa.20170503.11,
      author = {Tingting Wu and Yanbin Wu},
      title = {The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks},
      journal = {Journal of Finance and Accounting},
      volume = {5},
      number = {3},
      pages = {87-95},
      doi = {10.11648/j.jfa.20170503.11},
      url = {https://doi.org/10.11648/j.jfa.20170503.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20170503.11},
      abstract = {Chinese banking industry speeds up the process of internationalization as the global economy integrates and Chinese government accelerates the going out strategy. Many Chinese commercial banks explore overseas market by setting up new branches or merge and acquisition. Under the background, this paper uses empirical study to analyze the relationship between the degree of banks’ internationalization and business performance. Firstly, principal component analysis is applied to measure the degree of banks’ internationalization. Then, the paper constructs two models to analyze the panel data of five state-owned commercial banks, the second one with financial crisis as dummy variable. The results indicate that there is a U-shape relationship between the degree of banks’ internationalization and business performance in the first model without dummy variable. In the second model adding dummy variable, the financial crisis not only deteriorates Chinese commercial banks’ performance, but also makes the relationship between degree of internationalization and business performance become negative in 2008 while the degree of internationalization has positive influence on operational performance in years except for 2008.},
     year = {2017}
    }
    

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  • TY  - JOUR
    T1  - The Relationship Between International Diversification and Business Performance of Chinese Commercial Banks
    AU  - Tingting Wu
    AU  - Yanbin Wu
    Y1  - 2017/05/04
    PY  - 2017
    N1  - https://doi.org/10.11648/j.jfa.20170503.11
    DO  - 10.11648/j.jfa.20170503.11
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 87
    EP  - 95
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20170503.11
    AB  - Chinese banking industry speeds up the process of internationalization as the global economy integrates and Chinese government accelerates the going out strategy. Many Chinese commercial banks explore overseas market by setting up new branches or merge and acquisition. Under the background, this paper uses empirical study to analyze the relationship between the degree of banks’ internationalization and business performance. Firstly, principal component analysis is applied to measure the degree of banks’ internationalization. Then, the paper constructs two models to analyze the panel data of five state-owned commercial banks, the second one with financial crisis as dummy variable. The results indicate that there is a U-shape relationship between the degree of banks’ internationalization and business performance in the first model without dummy variable. In the second model adding dummy variable, the financial crisis not only deteriorates Chinese commercial banks’ performance, but also makes the relationship between degree of internationalization and business performance become negative in 2008 while the degree of internationalization has positive influence on operational performance in years except for 2008.
    VL  - 5
    IS  - 3
    ER  - 

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Author Information
  • School of Finance, Shanghai University of International Business and Economics, Shanghai, China

  • School of Law, Fudan University, Shanghai, China

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