Research On The Efficiency Of Capital Adequacy Regulation Of Commercial Banks In China

The past global financial crisis has changed the competitive situation of theinternational banking industry, the dramatic changes in the international economicenvironment has worsened the operating conditions of the bank system, and increased therisks faced by the worldwide banks. Hit by the crisis, Europe and the U.S. bankingsystem are facing a fundamental structural adjustment. The sense of crisis promoted thereform and development of the financial regulatory system, and Basel III is a product ofthe international consensus. China announced the "12th Five-Year" plan proposed,stressed that "participation in international financial criteria for a new round ofamendments to enhance the stability of the financial industry standards." At the sametime, the China Banking Regulatory Commission issued the guidance of China’s bankingsector to implement new regulatory standards, established a policy framework for China’sbanking industry to implement new regulatory standards. It constituted a new regulatoryframework in a period of commercial banks in China.Since the Basel capital regulation was established as the core of the riskmanagement system, academia had studied the influence of the capital adequacyrequirements on risks of commercial banks for a long time. Most scholars generallyagreed that the capital adequacy ratio requirement, whether to cover the risks faced bycommercial banks or to enhance the constraints of the risky behavior of commercialbanks, had had a positive impact. Under the situation of Basel III was formallyintroduced and the China Banking Regulatory Commission issued the new regulatorystandards guidance, the study of the influence of capital adequacy ratio on risks ofcommercial banks in China is more in line with China’s financial conditions and has itssignificance.In this paper,16representative commercial banks’ annual panel data (2003-2010)has been selected as the analysis sample. It was used to analyze all types of commercialbank capital adequacy level changes, and to study the influence of the commercial bank’scapital adequacy ratio on the level of risks. The empirical results showed the effect of thecurrent capital adequacy ratio of China’s commercial banks, which was planned to reducethe risk, is not obvious. Therefore, facing the problems in the capital regulation in China,we will study the characteristics of commercial banks in China to find the policy of thesound development of China’s banking industry.