The application of a Planned Economy Country Risk Model to the assessment of market entry into the Chinese banking sector

China pledged on joining the World Trade Organisation to fully liberalise the banking sector by December 2006 and thus exposed its domestic banks to foreign competition. Global banks have since been lured by the opportunities that this sector presents in terms of its market size, buoyant saving rates, rising real per capita income, improved living standards, and an increased need for financial products and services. Nevertheless, foreign banks face a number of risks when entering markets in China where government tightly regulates industrial development. The Planned Economy Risk Model (PERM) is introduced to assess the dimensions of risk in entering such markets. To illustrate its use PERM is then applied for investments in China.