Original Articles

An Empirical Study on the Locational Choices of Foreign Banks in China

  • College of Urban and Environmental Science, Peking University, Beijing 100871, China; Peking University-Lincoln Institute Center for Urban Development and Land Policy

Received date: 2008-10-12

  Revised date: 2009-04-07

  Online published: 2009-06-25

Supported by

National Natural Science Foundation of China, No.40871065


The gradual approach of reforms and deregulations in China,s banking sector has guided foreign banks in China. Foreign banks are highly concentrated in Shanghai, Beijing, Shenzhen, Guangzhou, Tianjin and Xiamen. They initially chose special economic zones and the capital city of Beijing, later diffused to Shanghai, Tianjin, Dalian and Guangzhou, and recently to some inland cities. Branches or sub-branches are more likely to agglomerate in Shanghai while representative offices favor both Beijing and Shanghai. The statistical analysis indicates that banking opportunities, banking sector size and externalities associated with financial centers direct the city choices of foreign banks in China. Foreign banks significantly favor cities with fewer restrictions on foreign banking activities and tend to be located in cities with more international trade and foreign enterprises, suggesting the significance of following the customer strategy. The location choices of foreign banks within China are also dependent on the investing banks, countries of origin. Representative offices and branches or sub-branches show some different locational behaviors in China. The importance of informational externalities and first-mover advantages would fuel the spatial agglomeration of foreign banks in China.

Cite this article

HE Canfei, FU Rong . An Empirical Study on the Locational Choices of Foreign Banks in China[J]. Acta Geographica Sinica, 2009 , 64(6) : 701 -712 . DOI: 10.11821/xb200906007


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