Research On The Capital Management Of Commercial Banks In China

Capital is of great significance to commercial banks. Capital is not only the basic fundsource in the establishment of a bank, but also the buffer reserve of the banks formitigating risks. When the Basle Accord was firstly published, it took the capitaladequacy ratio as a core supervisionstandard. Although the composition and structure ofcapital are always in changing, the importance of capital has not changed. Becausecapital is of great significance to banks and capital is an important govenmentalsupervision standard, capital management plays a significant role in the operation andmanagement of commercial banks.The development of the commercial banks’ capital management is closely linked withBasel Accord. In1988the Basel Committee promulgated the International Convergenceof Capital Measuerment and Capital Standards, namely Basel I. Basel I aims at thehealthy development and fair competition of the international banking industry and theestablishment of a global banking supervision system. In order to adapt to the innovationof financial market and financial institutions in the Europe and US, the Basel Committeestarted to revise Basel I from1998and issued a new Basel II in2004. The globalfinancial crisis in2008disrupted the implementation plan of Basel II in the world. In2009the Basel Committee reviewed the problems which were exposed in this financialcrisis and promulgated Basel III in2010.As Basel III was released, China Banking Regulatory Commission issued in2011theGuidance of Implementation of the New Regulatory Standards in China’s Banks in3May, the Commercial Bank’s Capital Management Approach (Draft) in15August andthe Commercial Bank Liquidity Risk Management Measures (Trial)(Draft) in12October. It indicates that China has begun to implement Basel III step by step. Capitalmanagement of commercial banks in China has entered into a new stage from then on.There will be both opportunities and challenges in this stage. Commercial banks in Chinaare in the best period of history in terms of asset scale and profit level. They can makefull use of this opportunity to change their business model and raise their capitalmanagement level. At the same time, commercial banks also have some problems, suchas lack of capital, large credit scale, rapid increase in non-performing loans and theexistence of other potential risks. This paper targets a research on how to improve the capital management mechanism and raise the capital management level of commercialbanks in the current stage facing both opportunities and challenges.This paper uses the historical analysis method in the review of the development of theBasel Accord and the development of the capital management system of commercialbanks in China, and uses empirical analysis method in analyzing a series of problems inthe capital management of China’s commercial banks, combining latest datas, and furtherprovides some suggestions on raising the capital management level of China’scommercial banks. This paper has five main parts. The first part is the introduction of thebackground and significance of the paper; the second part is the theory of bank capitalmanagement; the third part is the development of the Basel Accord and of the capitalmanagement system of China’s commercial banks; the fourth part is the current situationand problems of the capital management of China’s commercial banks; the fifth part isthe suggestions agaist the problems.