| Banking is the core section of Chinese financial system, the operation safety of which is very important to safety of Chinese financial system. Since 1990s, banking crisis have broken out frequently across the world and resulted in a lot of immensity loss. Accordingly, banking risk has won more and more attention from all governments and banking sections. At present, a lot of technical measures have been widely adopted in defending financial risk. However, it has only been designed based on the technical method, but neglected the system or institution factors. Since the reform of China banking industry in 1978, China has set up a regulation system constituted of the People's Bank of China and China Banking Regulation Committee and a banking system which is composed of several commercial banks. Though we have made great progress in the reform of China banking industry, we have to pay more attention to the system risk of Chinese banking so that we will be able to face up to new situations and meet the challenges in the future.This dissertation mainly studies the regulation of system risk of Chinese banking in theoretical, positive and application aspects.The first part of this dissertation mainly studies the system risk of Chinese banking in theoretical aspect. Chapter 1, as an introduction, is about the background, purpose and application of the research topics, with a brief description of the main content, structure of this study project, also methodology and new findings from this dissertation.Chapter 2 summarizes the theoretical category and relationship of the system, risk, profit, and regulation and provides short comments in the end. This chapter particularly explains the concept of system, risk, profit, and regulation in the beginning, then summarizes the idea on the relationship of system, risk, profit and regulation, finally summarizes the literature on the regulation on banking risk, which includes the operation risk of banking, regulation, salary promotion and financing system associated with Chinese banking.Based on the principal-agent theory, chapter 3 discusses the personnel arrangement and the best promotion-system to improve working efficiency and tries to analyze the reformation of the salary promoting. The last of chapter 3 applies the KMRW model to analyze the game behavior of the customer service manager in different situations.Chapter 4 mostly analyzes the reason risks can occur in banking and what kind of risk will occur in the operation of banking. The reason why risks occur in banking can be classified as interned-driving mechanism and external-driving mechanism. Risk in Chinese banking mainly contains sovereignty risk, law risk and market risk including credit risk, operation risk, interest risk and foreign exchange risk.The second part of this dissertation, positive analysis, is made up of chapter 5, chapter 6, chapter 7, chapter 8 and chapter 9. Chapter 5 mainly researches the macroeconomics system risk of Chinese banking. At the beginning, chapter 5 describes the evolvement of Chinese banking system in two aspects, namely, Chinese commercial banking system and Chinese banking regulation system. It also discusses about the risk of Chinese deposit insurance system, and then applies the game theory to analyze the game between the supervisor and commercial banks and the incentive for bank to take risk in different period.Chapter 6 mostly analyzes the influence of the relationship between commercial banks and government and the relationship between commercial banks and firms on Chinese banking industry. This chapter is carried out in two sections. First section discusses the credit risk in the game between commercial banks and government. The other section analyses what Chinese banking risk is bond to face when relationship financing is competing with arm-length financing. Chapter 7 mostly focuses on the interest system risk and foreign exchange system risk of Chinese banking.Chapter 8 analyzes the competence and measures the risk of Chinese banking. As insolvency risk index and system riskβindex are all good indexes to measure the risk level of commercial bank. Chapter 8 also applies insolvency index to calculate the insolvency risk of Chinese banking, and then calculates the month-βindex of Chinese public banks with stock price data, finally applies the modified Tobin q model to calculate the Tobin q of the fourteen banks in China.Chapter 9 mainly applies econometrics theory to test the system risk of Chinese banking. At the beginning, this chapter applies insolvency risk index to test the macroeconomics risk of Chinese banking as scale of bank, the ratio of loan loss reserve to total loan, ROE, the ratio of total loan to total asset and total deposition to total asset are selected to measure the system of Chinese banking. Then it tests the interest system risk and foreign exchange system risk with the stock transaction data of Chinese and Japanese public banks.Chapter 10, as the last part, is the policy and application analysis. Based on the theoretical analysis and econometrical analysis, chapter 10 goes deep into the risk regulation according to the system designation and system arrangement. Considering the nation condition of China and regulating Chinese banking system risk, this paper suggests we should pay more attention on the institution building which include deepening the reform of Chinese banking and perfecting supversion system, building constraint mechanism between government and corporation and changing running model of Chinese commercial bank, optimizing interest structure and deepening the reform of Chinese finance system, improving the incentive mechanism of compensation and building the mechanism of rewards and punishments on the operator of commercial bank, speeding the innovation of financial products and enriching the means to control risk.
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