The Research On Chinese Commercial Banks' Enhancement Of Capital Adequacy Ratio And Restriction Of Asset Growth

As the basic essential of the commercial bank's core competence,capital is not only the substantial foundation of bank's sound operation and the assurance of normal business,but also the last safeguard of risk withstanding. Capital adequacy ratio is the guide line to show capital strength and risk management capability.Along with the implement of Basel capital regulation's new version,the Basel committee is more exigent on capital adequacy ratio,especially for developing countries'banking. The new bank capital management requirements were also published in 2004 by our government. The requirements change the former rules of law in which there is no punishment on those banks without adequate capital,and establish a series of operational criterions and processes.Facing these higher standards home and abroad and Chinese totally-open financial market after joining in WTO,our commercial banks'capital adequacy ratio is still very low. How to establish some effective mechanisms to steady the capital adequacy ratio is well worth studying. If we can find the key point from complicated reasons,we will get twice the result with half the effort. This paper considers that: the main point is that the banking system has not built an operational mechanism to restrict expansion of asset scale , which corrades complementary capital from government and security market. So asset growth must be controlled by capital amount.This paper investigates the relationship between commercial banks' capital deficiency and the situation of asset scale expansion,combines both aspects in empirical approaches,analyses the causality and the influence between them. Based on the analysis above,we can put forward the way of solution from two aspects: on one hand capital must be complemented, on the other hand the mechanism of restricting expansion of asset scale should be established as soon as possible.This paper includes three parts. Firstly,it focuses on the capital adequacy ratio of Chinese commercial banks. The first part discusses four factors: the meaning of commercial bank's capital,the new requirements on capital adequacy ratio of new Basel capital regulation,the actuality of Chinese commercial banks'capital adequacy ratio and the reasons leading to it. Secondly,it focuses on the asset growth of Chinese commercial banks. The second part analyses the actuality of asset growth and the reasons leading to the nonrestraint. Thirdly,it points out the way to enhance capital adequacy ratio and to build the mechanism of restricting asset scale expansion. The third part is the most important one. It uses empirical approaches and the recent data of Chinese commercial banks,analyses the situations of national banks and stock banks,and points out the way of solution from both capital and asset aspects.So far,the domestic researches on the relationship between commercial bank's capital adequacy ratio and asset expansion have paid more attention to theories than practice,even only regarded the high-speed increasing asset scale without considering capital adequacy ratio at all. The author hopes that the paper can sum up prevenient researches and conclude a integrated idea.