The Foreign Banks' Influence in InformationTechnology Adoption in the Chinese Banking System

Abstract

Foreign direct investment has been a common conduit of technology transfer for the locally funded enterprises in the host country to adopt foreign technology. In addition, it could be a powerful agent in affecting technology adoption within a technologically backward host country. By contrast, foreign direct investment has not been a significant source of information technology transfer into the Chinese banking system. Neither has it been an effective agent in affecting technology adoption in this system. The priority and concern of the Chinese government in protecting, and retaining control of, its domestic banks and financial market have kept foreign direct investment in the banking industry at a relatively modest level. The controlled industry, the long wait for full market competition, and the inadequate infrastructure and operating framework have inhibited the foreign banks from adopting highly sophisticated information technology for their restricted business operations and from being an effective conduit in technology transfer.