Are Foreigners Smarter? Evidence from Investment Products' Returns of Foreign and Domestic Commercial Banks in China

Abstract

Abstract:

With the development of financial globalization and the increasing competition of Chinese banking industry, many international banks have entered the Chinese investment product market. Based on the investment products of 80 commercial banks, this paper compares the performance of domestic bank investment products with that of foreign bank investment products and explores determinants of the products' performance. The results indicate that, in China, the return of foreign bank investment products is higher than that of domestic bank investment products; the return of foreign currency investment products is higher than that of RMB investment products; the return of foreign currency investment products is the highest among all products. Furthermore, we find that product design, portfolio selection and market environment are significantly related to the performance of investment products, and the foreign currency investment products issued from foreign banks often have the highest return. Furthermore, we find that product features, investment targets, investment modes and market environment are significantly related to the performance of investment products.

Key words: commercial banks, currency, investment products, performance

Zhu Hongquan, Gong Fei, Xie Xiaohong, Zheng Jiamei. Are Foreigners Smarter? Evidence from Investment Products' Returns of Foreign and Domestic Commercial Banks in China[J]. , 2016, 28(3): 106-115.

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