Research On Arbitrage Mode And Supervision Of Commercial Banks In China

In recent years, China’s commercial interbank business rise rapidly. The business expanding to a large scale, and the varieties become more complex. Commercial banks earn a high return through the interbank business.Meanwhile, the interbank business support economic development. However, its potential risks and negative effects are also growing.This paper discusses the connotation and classification of commercial banks, then analyzes its current situation of the development. Three reasons lead to the rapid growth:the monetary authorities implement the credit scale control and the regulatory authority carry out the loan industry regulation, cause the lack of supply of funds. Due to the defects of banking supervision system and separate regulatory system, commercial interbank business results in regulatory arbitrage. Commercial banks also obtain profits, scale, etc. This paper focuses on the main mode of commercial banks to carry out regulatory arbitrage, for instance the transfer of credit assets, bill business, interbank payment, financial management business and interbank investment. The common points are man-made fault information, using wrong accounting methods and unclear risk management responsibility.The regulatory arbitrage results in some negative effects, such as the weakening of macroeconomic policies have been weakened and the accumulation of various types of risk, risk contagion. Although the authorities have introduced a number of policies, but the actual effect are still not fully satisfied, subject to the regulatory system, objectives, technical means. Some measures could be taken to solve the problem, include strengthen the supervision of the interbank business, improve cooperation between different regulators, maintain the regulatory independence and macro policy stability.