Institutional Logics in International Banking and the Rise of Chinese Banks

Chinese banks have thus far opted for slow, organic growth in their overseas network expansion rather extensive acquisition of local banks, but their expected impact on international banking practices should be large.  International banking practices have been defined partly through organizational isomorphism, partly through hypernorms and local banking cultures, and partly through a legacy of Anglo-American institutional logics. Important institutional and ethical differences exist between incumbent and Chinese banking practices, and these differences arise through development of national banking systems and local culture. These manifest as local variants of banking institutional logics. Chinese international bank expansion carries with it three important differences:  Chinese banks’ tilt toward relationship banking, the pervasive impact of guanxi in financial contracting, and the fact that internationally-expanding Chinese banks are largely state-owned. Examining the intersection between incumbent and emergent institutional logics helps to predict how Chinese banking may affect international banking ethics and vice versa.