Foreign Strategic Investors, State Ownership, and Non-interest Activities: Evidence from China

This paper contributes to the literature on foreign strategic investors (FSIs) by examining the influence of FSIs on non-interest activities. Using data from China's banks for 2001-2016, we find that FSI entry is associated with significantly increased non-interest activities, especially commission and fee activities, of Chinese banks. Furthermore, local banks with directors appointed by FSIs have increased non-interest activities. Moreover, in state-owned banks, the effects of FSIs and directors assigned by FSIs on non-interest activities are both weaker. We also find that non-interest activities have not significantly changed after the exit of FSIs. These empirical findings will be informative and relevant to both policymakers and practitioners. (C) 2020 Elsevier B.V. All rights reserved.