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A Study On The Effectiveness Of Capital Adequacy Ratio Supervision

Posted on:2005-01-03Degree:MasterType:Thesis
Country:ChinaCandidate:J Z FangFull Text:PDF
GTID:2156360125955913Subject:Finance
Abstract/Summary:PDF Full Text Request
The Capital Adequacy Ratio (CAR) supervision has gradually been the norm complied to by global banking industry in common and the core arrangement of the prudential supervision institution on bank with the enforcement of 1988 Basel Accord and the coming forth of New Basel Accord. But in theoretic and practical field, there has long doubt about the effectiveness of the CAR supervision as one of banking supervision methods with such significance, so this paper makes an overview on theory and empirical test about the effectiveness of Capital Adequacy Ratio supervision.The paper is divided into four parts and surveys the existing theoretic foundation, the theoretic probe into the effectiveness, the empirical test results and the practice of the CAR supervision. The first chapter surveys the existing theoretic foundation of the CAR regulation and analyses two questions. Firstly, why does market require bank, as general and peculiar firm, to hold capital; secondly, why does regulator require bank to hold capital in the case of the market requirements. The second chapter surveys the theoretic probe into the question that the CAR supervision is effective or not and the involved theory is divided into three groups. The first one is the theories and their main points from the angel of external agents and put the CAR supervision into bank supervision frame. The second one is the theories and their main points considering of external and internal agents simultaneously, and the last one is from incentive points. Whereas no consentaneous conclusion is drawn from the theoretic analysis, so the empirical test results of the CAR supervision is set forth in the third chapter of the paper and are classified into three types: the empirical test results on the capital level and risk taking, the inherent relationship between capital ratio, risk level and effectiveness, the credit crunch hypothesis after the enforcement of CAR regulation. But the theoretic and empirical conclusion are disappointing, so the last and fourth chapter analyses the question that how to improve the effectiveness of CAR supervision. The fourth chapter includes two parts, the first one make theoretic probe into the improving path of the CAR supervision and the second part accounts for practical innovation of CAR regulation with the improvement of New Basel Accord.
Keywords/Search Tags:Capital Adequacy Ratio, market discipline, The Basel Accord, Asset Risk
PDF Full Text Request
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