【文章內(nèi)容簡(jiǎn)介】 ng indicates that the labor cost is not an important factor in influencing foreign banks’ entry. Fourth, we divide factors into basic factors (which is the conversional four models) and regional factors (which is our city infrastructure). Thus, we extend the literature in a slight way which helps us understand the importance of software and hardware environments. The remaining part of this chapter is anized as follows. Section 2 introduces the development and major events of foreign banks in the last 30 years。 Section 3 is literature review。 Section 4 presents our empirical model. Section 5 describes data and sample construction and basic statistics。 Section 6 reports the regression results。 and Section 7 is our conclusions. History of Foreign Banks in China The history of foreign banks in China dates back to over 100 years. However, when the People’s Republic of China was founded in 1949, the central government allowed only four foreign banks, Hong Kong and Shanghai Banking Corporation (HSBC), Bank of East Asia, OverseaChinese Banking Corporation (OCBC), and Standard Chartered Bank, to stay in Shanghai. After thatthe development of foreign banks in China stagnated because of plex international political relation until 1978. At that time, the central government decided to open itself up to the world and launch the great reform practice. From 1978 to 2021, the development of foreign banks in China can be divided into three stages. The first stage is the initial phase of openingup, which started from mainly in the late 1970. In 1979, Chinese government permitted the Industrial Bank of Japan to establish the representative office of nonbusiness. In 1981, foreign banks were further permitted to set up operational agents in five special economic zones, which are Shenzhen, Zhuhai, Xiamen, Shantou and Island Hainan. The most important impact for foreign bank entries is the pass of the stipulations of establishing foreign branches in 1983 and foreign banks and Chineseforeign joint venture banks in Xiamen international bank was set up based on the later law. However, the restrictions in setting up foreign bank offices are not deregulated. The second phase further deregulated the location restrictions mostly. Since 1990, China government expanded the number of cities where foreign banks are permitted to set up representative offices or branches in cities outside the special economic zones for the first time. By the end of 1997, foreign banks have set up totally 175 branches in China. The fast growth of foreign banks number, however, slowed down and some of them are even closed after Asian crisis erupted in 1997. In the end of 2021, the total number of foreign banks’ branches in China was only 159, and the increase of 4 years is only 17. The last phase is deregulation of business restriction, which is partially due to the officially returning to World Trade Organization in 2021. Before this stage, while the location restrictions are largely removed, business operation is prohibited. In 1996, authority first allows Renminbi (RMB) business by Citigroup, HSBC, Societe Generale of TokyoMitsubishi in Shanghai Pudong New Zone for foreign firms only. In 2021, the restrictions are lifted for local firms within 2 years and remove all geographical restrictions. In 2021, 25 cities are allowed for foreign banks to engage inRMBbusiness. Other deregulation continues. All of these changes suggest that foreign banks can largely free to choose the locations they want to invest. 3 Literature Review Previous studies have considered foreign banks’ location choice at the national and subnational levels. First, a great deal of studies at the national level focus on country characteristics affecting foreign banks’ 1 The exact name of