Abstract

The competence of supplying financial resource in RMB retail market becomes more severe as foreign banks are authorized to enter this market. Therefore, more and more researches on such competition come out. But they ignore the effect of supply timing on competence. It’s a new perspective to analyze the supplying time using first-mover advantage according to option game theory. The traditional option game theory doesn’t consider first-mover advantage which is obvious in banking. Therefore option game with first-mover advantage is more suitable for banking. According to the conclusions from this article’s model, Chinese banks as leader will do their best to enlarge the first-mover advantage to defer the entry timing of foreign banks. Foreign banks as follower will try to conquer the disadvantages from first-mover advantage. But foreign banks don’t succeed in acquiring more market-share in cities because first-mover advantage is great. Therefore they have to look for other ways to enter this market.

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