Study On The Management Of Leverage Ratio Of The Commercial Banks In China

In2008, the international financial crisis triggered by the U.S.subprime mortgage crisis breaking out. Although the capital adequacyratio had a high level in the major commercial banks of Europe and theUnited States before the crisis, they still did not escape from the impact ofthe financial crisis and suffered heavy losses. Therefore, the internationalcommunity reflected comprehensively to the current capital regulatorysystem. They point out that the capital adequacy ratio is difficult tosupervise the systemic risk of banks. BaselⅢ is the product of the reformof the global banking capital regulation. It has put forward higherrequirements for the whole world’s capital regulation. As a newregulatory indicator and an effective supplement to the lack of capitaladequacy ratio, leverage ratio is an important part of Basel Ⅲof capitalregulation framework. Its importance cannot be ignored. Therefore, thestudy on the financial leverage ratio management of commercial banks inthe present and even the future has extremely important practicalsignificance.Firstly, this article elaborates the concept of financial leverage ratioas well as characteristics of the detail, the financial leverage ratiocompares with the capital adequacy ratio, a brief explanation of severalimportant theory of capital structure involved in this article, in-depthanalysis of the system of the financial leverage ratio in China and abroad. These studies have laid a solid theoretical foundation for the whole article.Then, according to the division of the CBRC on the type of commercialbanks in China, combined with China’s16listed commercial banks’financial data, financial leverage ratio of commercial banks in Chinaconducted a comprehensive statistical analysis of the status quo. Due tothe presence of various uncertain factors, the level of financial leverageratio in commercial banks is influenced by many factors. So what are thefactors affecting the level of financial leverage ratio? Chapter fourexplain the details. We select the panel data of China’s14listedcommercial banks to further testing. The result is that commercial banksfinancial leverage ratio is negative with the capital adequacy ratio,profitability, non-performing loan ratio and positive correlation betweenthe size of the commercial banks. Finally, we propose reasonable policysuggestions on how to improve the management of China’s commercialbanks’ financial leverage ratio.