Study Of The Capital Adequacy Regulation Of The Commercial Bank In China

In the various measure of the financial regulation, there is no any other measure but the capital adequacy regulation could call attention. Capital adequacy regulation is the core content of commercial banks' risk management and is the guarantee of its steady management. The essential of CAR is requiring the banks to keep certain capital adequacy ratio to resist the impact of the disadvantageous factor, and reduce the dependence on the government's help, and reduce the cost of the deposit insurance system, and keep whole banking stability. This paper start with the actual situation of regulation, plan to discuss why we need the CAR regulation and how to establish the CAR regulation system which keeping with our country actual situation. The full text totally is divided into five parts. The first part discussed the necessity of the implement of the capital adequacy regulation, and with the mathematics model, we discussed the important function of the CAR regulation to reduce risks and decrease the cost of the government salvation. In the second part, we reviewed the evolvement of the Basel protocol, which is the foundation of the CAR regulation. We also reviewed the actuality of the CAR regulation of some developed countries. In the third part, we discussed the current situation of the CAR regulation, pointed out the situation faced by our country's commercial banks is severe, and there much problem in the regulation. The design of the regulation system is not reasonable. In the forth part, we discussed to establish our country's trinitarian CAR regulation system: the capital adequacy ratio, lever ratio and the capital ratio prevising system. The capital adequacy ratio is the core of the whole system. We introduced the capital request of the credit risk, market risk and operation risk, and provided the calculation method respectively. Lastly, we present the policy suggestion, that is we need to accelerate the the stock-system reform, establish the capital complement mechanism, adjust the assets structure, and enhance the regulation measure, so we can reduce the commercial banks' risk.