Compatible-Incentive Banking Regulatory Mechanism Under Capital Budget

The supervision to bank,formed after the recession of 1930's, is an incompatible-incentive regulation. to some extent, it plays an important role in stabilizing the financial market at the cost of the efficiency of bank, which hampers the financial innovation and decreases the efficiency by increasing not only the supervision cost of supervisors but also the cost of supervisee banks.In recent years, with the development of Game Theory and Information Economics that obviously push ahead the economic incentive theory, revolutionary changes have happened in the idea of supervision to bank and shaped the compatible-incentive regulation mechanism. This kind of mechanism can activate the action of market, give the right of self-judgment to bank to some extent, and at the same time make itself more active and initiative, which can enhance the interaction between supervisors and supervisees, enforce the stability of financial market, and widen the scope of banks. To international banks, this is the necessary evolvement trend of supervision way. Therefore, it is important to study the supervision mechanism both in theory and in practice.Under capital budget, the thesis intends to do further research in the compatible-incentive regulation of bank institutions under capital budget, which helps people to deepen the comprehesion of the idea of compatible-incentive, and forwards the development of supervision mechanism in our country.By commentating the incentive theory in management, in economics and under the condition of information asymmetry, and new regulation theory, the thesis introduces the process of the development of incentive theory and new regulation theory. Based on the materials mentioned above, the core problem is quested.It is observed from documents that stimulation design goes astray because of the limitation of classical compatible-incentive theory. In theory the more complicated the stimulation mechanism is, the more efficient it is. Howerver in practice it is less applicable, which demonstrates the limitation of existed theories. Therefore, for one thing, considering the financial risk in system,the thesis puts forward a new definition adapting to our economy which is the compatible-incentive degree.For another thing, the thesis sets the definition of capital budget, accounts for the essence of capital budget, and points out that the quality grow model in capital budget is the necessary selection of commercial bank. On this basis, the thesis gets a conclusion that the compatible-incentive and capital budget should affect coordinately on the basis of supervision valuation, by analysing the relationship between capital budget and compatible-incentive. At last, by studying the ideas of capital budget and compatible-incentive appearing in New Basel Accord, the thesis gets the point: both the ideas of capital budget and compatible-incentive are shown not only in theories, but also in supervision practice of international banks.On the basis of study of theory, the thesis undertakes the systematic analysis to three aspects of state quos of our bank: capital situation, daily supervision and exit compatible-incentive. By testifying relationship between the bank profitability and capital sufficiency rate, and capital structure, the thesis finds that under the situation of main role of implicit deposit guarantee mechanism, the capital quantity of our banks is some compatible-incentive, although the capital quality is seriously low. However the high-cost capital structure, which is a capital structure mainly comprised of core capital, is incompatible-incentive. the thesis analyses the investing program of state-run bank and believes that although this land of investment from government is certainly reasonable due to history causes, it is low compatible-incentive.By testifying market budget of our banks, the thesis finds that the function of this budget power is still very weak, and the power of supervision to banks under the implicit deposit guarantee mechanism is not from market but mainly from government. the thesis has quoted some data and studied two cases: the investigation of daily regulating supervision compatible-incentive of finance in a city of Shandong province and the incompatible-incentive analysis of the supervision charge of China Banking Regulatroy Commission, which demenstrates that whether on macrolevel or on microlevel today's bank regulation supervision controled under government, is incompatible-incentive.By testifying failure of banks related to the capital ratio, the thesis finds that in any country, developed or developing, failure of banks is in the inverse ratio of the capital ratio.Our banks can still run. with serious lack of capital ratio, attributing to leading role of the implicit deposit guarantee mechanism. With studies of theories and cases, it is proved that, compared with capital budget, implicit deposit guarantee mechanism is much more inferior. However, we must burden more if implicit deposit guarantee mechanism is replaced by capital budget mechanism. Therefore, implicit deposit guarantee mechanism has some compatible-incentive function, even though it lowers the efficiency of exiting mechanism in our banks. Along with the further reform of banks, the low efficiency appears more and more apparent, which hampers the formation of competitive market. At the same time, the positive effect of capital budget mechanism becomes more and more remarkable.On the basis of both theory and testifying stated above, the thesis puts forward the definition of supervision reform. Considering the special situation of our country and new development of the way of international banks supervision, the thesis also puts forward the resolving program to the problem banks in capital budget, which is suitable to our special situation. The definition includes incentive, budget and consistent, with the core of compatible-incentive under the capital budget.