Impacts Of Capital Adequacy Ratio Regulation On Credit Expansion Of Commercial Banks In China

Capital Adequacy Ratio（CAR） regulation is the core and international standards ofprudent banking supervision. It runs through the whole process of the commercial bankingmarket access, continuous operations and market exit. It is one of the most important externalconstraints that Commercial banks are facing. The implementation of strict capital regulationon the conduct of operations of commercial banks to form a strong external constraint. It willaffect the credit supply capacity of the banking system, and then run the macro-economic.Some countries in the implementation of bank capital regulation, have varying degrees ofcredit crunch and economic recession.The CAR regulation of commercial banks in China began in the mid-1990s. Comparedwith Western countries, differ materially from those in the economic environment, theinstitutional background and the banking system. Therefore, implementation of bank capitalregulation may show different supervision effects in China. We analyze impact of CARregulation on credit expansion of Chinese commercial banks base on combine thecharacteristics of China’s capital regulatory regime, using a combination of methods oftheoretical analysis and empirical analysis, from the points of the way of CAR regulationaffect on credit expansion of commercial banks, commercial bank’s capital nature anddifferent level of capital level. Final draw conclusions and make appropriaterecommendations.This article consists of five chapters:The first chapter is foreshadowing part of the article, explain the background andmotivation of the bank capital adequacy regulation, made a brief exposition about the BaselCapital Accord and to discuss the international experience of the implementation of theregulation of capital adequacy ratio.The second chapter is the theoretical part of the article, we analyze mechanism of CARregulation affect credit expansion of commercial banks.The third chapter, at first, we discuss the changes and characteristics of the Chinesecapital regulatory regime. Based on the above analysis, we analyzes the CAR situation ofChinese banks and the trend of credit expansion, preliminary study of the impact of the CARregulation on credit expansion of Chinese commercial banks. The fourth chapter is the empirical part of this article, we construct a panel data model,using Eviews software package for regression analysis, and detailed discussion of the impactof the CAR regulation on credit expansion of Chinese commercial banks from multipleperspectives.The last chapter is the paper’s concludes and policy recommendations, on the basis oftheoretical analysis and empirical research, draw the main conclusions of this paper and thecorresponding policy recommendations.