A Study On The Validity Of Capital Adequacy Supervision

The paper mainly discusses on the validity of capital adequacy supervision. Firstly, by means of applying the theory about validity of financial supervision, the paper constructs the analysis framework of the validity of capital adequacy supervision. Then, applying MM theorem and risk theory, the paper constructs two mathematical models of the relation of bank capital with asset risks, one without capital requirement and the other with. Then the paper analyses the impact of capital requirement on bankruptcy probability by mathematical and empirical methods. Additionally, the paper researches on the impact of capital requirement on bank efficiency and macro-economy, to analyses the validity of capital adequacy supervision. Then, the paper researches on the factors which affect the validity of capital adequacy supervision. At last, by the fruit of research above, to advice how to carry out capital adequacy supervision in china.The content of the full paper is arranged as follows:Chapter 1 explains the research background and meaning of this paper, comments the current research situation of the validity of capital adequacy supervision, and sets forth academic value of this research.Chapter 2 introduces and comments the theory of financial supervision, constructs the approach to analyses the validity of financial supervision.Chapter 3 explains the conception of capital, the function of capital, capital adequacy and the standard of capital adequacy, etc. analyses the aim of capital adequacy supervision and the approach to analyses the validity of financial supervision, such as research contents and indexes.Chapter 4 analyses the impact of capital adequacy supervision on bankruptcy probability. Firstly, explaining the trouble of bankruptcy, so it is importance to prevent the bankruptcy. Then constructs two mathematical models of the relation of bank capital with asset risks, one without capital requirement and the other with, toanalyses the impact of capital requirement on bankruptcy probability by mathematical and empirical methods. The conclusion is capital adequacy supervision can drop the bankruptcy probability. Because china is in the transition period now, the paper analyses the impact of capital requirement in this period. The conclusion is capital adequacy requirement increase the bankruptcy probability during this period. At last, the paper applies the dada of banks in America to prove the conclusions.Chapter 5 analyses the impact of capital adequacy requirement on bank's efficiency, the amount of deposit and credit, and the ratio of GDP increasing. According to the data in G10 and other five development countries, the paper discovers the conclusion as follows: (1) capital adequacy supervision is not affect bank efficiency obviously; (2) the amount of banks deposit and credit shrink in transition period ;(3) the ratio of GDP increasing is down in transition period;(4) After the capital requirement is carried out completely, all bad affections are occurred in transition period will disappear. According to the conclusions in chapter 4 and 5, the paper considers capital adequacy supervision is valid.Chapter 6 analyses the impact of regulation forbearance and regulation error on validity of capital adequacy supervision. The paper concludes that capital adequacy regulation should be invalid if it were carried out in bank system of government. The paper puts forward some ways to settle such three problems. Additionally, the paper talks about the problem that how to set down the standard of capital adequacy.Chapter 7 researches on the problems of bank and financial supervision in China now. To carry out capital adequacy supervision validly, the following problem should be settled first in china: reforming bank property rights, reducing regulation forbearance and regulation error, increasing bank capital ratio. By applying the research fruit above, some advice is put forward.