The Impact Of Macro-Prudential Supervision On The Prudent Management Of Chinese Commercial Banks

The financial crisis broke out in2008, which exposed the micro-prudential supervision framework’s defect of only paying attention to the stable management of the individual institutions. After the G20summit, during which The Basel committee reviewed regulatory standards, the Basel III was passed, which reflects most of the world’s countries’ consensus on macro-prudential supervision. Our country draw lessons from foreign experience, combined with China’s national condition, established a framework of macro-prudential regulation, which puts forward stricter standard that surround the new requirement about Tier1Capital Ratio, Capital Conservation Buffer, Countercyclical Buffer, Leverage ratio and the content such as systemically important banks and introducing liquidity indicators. Its purpose is to more effectively maintain the stability of the financial system and real economy. What effect to our country commercial bank in the implementation of the macro-prudential regulation?Firstly,on the basis of summarizing the related literature about the regulatory tools impact on our country commercial bank management, this thesis discusses the influence of four regulatory tools-capital adequacy ratio, provision coverage, leverage, liquidity ratio--on the safety, liquidity and profitability of commercial bank.On the basis above, this paper selected the data of16commercial Banks from2005-2012annual report and half annual report. From these data we use ROA, loan-to-deposit-ratio and non-performing loan ratio respectively as the commercial banks’ prudent management indicator of profitability, liquidity and safety. And based on panel data model, we use the STATA software to test the four regulatory tools" influence on the prudent management of listed banks in china. The empirical results show that, both capital adequacy ratio and provision coverage have a significant positive correlation with Commercial bank profitability. This suggests that higher capital ratios and provision coverage can enhance the profitability of our commercial banks. Capital adequacy ratio and provision coverage had a positive but insignificant correlation with liquidity. Capital adequacy ratio and provision coverage exist significant negative correlation relationship with commercial bank safety. This proved that higher capital ratios and higher provision coverage can reduce the non-performing loan ratio. So it proves to be that china’s financial regulatory authorities in recent years introduces a series of laws and regulations effective in enhancing the profitability and reducing the level risk of commercial banks.Under the macro prudential regulation, this paper explores the challenge for the different banks and the existing problems. Based on the empirical results above and the present condition of commercial bank management in our country, this thesis puts forward suggestions for the operator about how to implement a prudent management and for the regulators about how to perfect our country macro-prudential regulation.