The Study On Validity Of Bank Capital Adequacy Regulation

Capital adequacy ratio is the most important indicator evaluating the stability of the banking industry. With the popular enforcement of the 1988 Basel Accord, the minimum capital adequacy ratio has become the international norms generally accepted by the global banking industry, and has become one of the most important instruments in banking supervision mechanism. The initial aim of capital adequacy supervision is designed to maintain the capital adequacy ratio of a bank on a desired level so that the bank would remain strong under the impact of adverse circumstances. It helps to free the bank from its severe reliance on the financial support provided by the government as well as its great vulnerability to the moral hazard brought by the deposit insurance system, which would finally lead to an overall stability of the banking system.In recent years, with the great step of the finance innovation and the acceleration of international financial risk's transfer, the risks that banks face are increasing. Due to the important status of the banking industry in the country's economy, bank supervision has long been the focus of finance supervision organization. It is an urgent task for us to research how to strengthen and improve bank supervision, increase the effectiveness of bank's supervision, lower bank's risk and keep the stability of the banking industry. In spite of catering to new changes of finance situation and increase the competitiveness of the banking industry, all financial supervision administration change their banking supervision model and relax many regulations on banking industry. But for the minimum capital adequacy requirement, they all take stricter supervision measures than before. CAR supervision has gradually become the core of bank supervision. This system is still improved and strengthened with the New Basel Accord put into effect.From the research findings of abroad and home, there are still lots of arguments about the effectiveness of the capital adequacy supervision. From the practice of bank supervision in other countries, they achieved different results. So we can see it has great theoretic significance and practical value to research the theoretic foundation of the capital adequacy regulation and its practice for our bank. Because capital adequacy supervision is external interference on the bank's capital structure, this paper starts with the introduction of the capital structure and the revised MM theorem model, and then analyzes the special determination process of the bank's capital structure. So we conclude that it is essential to carry out the capital adequacy supervision in china. At this base, this...