Why Chinese bank internationalisation is gradual - an historical institutional perspective

Abstract

Chinese banks have opted for slow, organic growth in their overseas network expansion rather extensive bank acquisitions, but their future impacts on international banking and financial systems are expected to be large. This paper follows four interlinked paths: First, it sketches an institutional logics perspective on banking systems in China, Japan, UK and the US in historical context of the international financial system, then [second] looks at challenges to the incumbent over that history. The US challenged the UK in the first half of the 20th century; Japan challenged the US in the last quarter of the 20th century. Both of these challenges provide insight into China’s modern challenge. Third, using historical process-tracing and inference, it places Chinese international banking expansion into this context. And fourth, it suggests how Chinese banks will expand internationally by ‘following the flag’. In this process, both Chinese banks and international banking practices will co-evolve.