Cost-benefit analysis for banking internationalization

Banking internationalization theories la g behind the unprecedented practice and still deserve further investigation. This paper adopts the widely accepted cost-benefit analysis approach to develop the operation models of banks under closed and open economy and provides an appropriate framework for the prerequisites of banking internationalization. It suggests that the increase in direct profit and the foreign market entry costs are two major concerns in the process of banking internationalization. The result of the study may derive implications for China's banking operation and financial policy making as well as the sustainable development of financial system.