| Capital structure is one of the core issues for modern companies. Commercialbank is a company that running with monetary assets whose capital structure is veryspecial comparing to other companies. Research on commercial bank’s capitalstructure involves the issue of commercial bank’s capital regulation and capitaladequacy ratio.Basel Capital Accord is regarded as a globally recognized regulation of capital,which provides a unified standard for international financial regulation. BaselCommittee constantly updates and improves Basel Capital Accord according tobusiness environment of banking industry and global financial environment. TheGlobal Financial Crisis of2008exposes hidden risks existing in commercial bank’ scapital structure, which shows the importance of strengthening the regulation offinancial institutions and improving commercial bank’s capital structure and the levelof adequacy ratio and core capital adequacy ratio. China’s banking industry is notaffected too much in the crisis, but if our commercial banks want to maintain theircompetitiveness and have the ability to resist risks. We must solve the problem ofcapital structure and capital adequacy ratio.This paper is based on promulgations and amendments of each Basel CapitalAccord. First, we review literature on research subject at home and abroad. Then, we goover all Basel Capital Accord and summarize the definition and composition of capitalaccording to Basel Capital Accord. The changes of capital regulation in Basel CapitalAccord Ⅲ for commercial bank are mainly from two aspects: On one hand, itoptimizes the quantity and quality of banking capital; On the other hand, leverage ratiohas been introduced as a supplementary tool for capital adequacy ratio regulation.China’s commercial banks are facing two challenges from Basel Capital Accord Ⅲ, first,how to improve capital adequacy ratio and core capital adequacy ratio if the method ofexpanding banks’ size has been proven ineffective? Second, Basel Capital Accord Ⅲhas introduced leverage ratio as a regulation index to supervise commercial bank. Chinabanking regulatory commission also adopts this tool and asks commercial banks to meetthe requirement of4%leverage ratio, which is stricter than what is required in BaselCapital Accord Ⅲ. As we know, leverage ratio is designed for commercial banks indeveloped countries, most of which do mixed operation and investment banking business, while China’s commercial banks mainly focuses on traditional credit business.Therefore, the question is weather leverage ratio is suitable for China’s banking industry?Then, we try to solve these problems by empirical research. We use the data of12commercial banks from the year of2006to2011and establish multiple linearregression model so as to analyze determinants of China’s commercial bank capitalstructure, capital adequacy ratio and core capital adequacy ratio. The results show that:(1) There is no pro-cyclical issue existing in capital structure and capital adequacy ratioof our commercial banks. In the short term, leverage ratio is not suitable for ourcommercial banks either as a micro-prudential regulation tool or as a counter-cyclicalregulation tool.(2) The simple model of expanding bank’s size chose by ourcommercial banks is unsustainable and lack of effectiveness.(3) Improving the abilityof resisting risks and profitability are only two ways of enhancing the level of capitaladequacy ratio. However, each regulation does have its bug, if commercial bank is ableto find an optimal capital structure and approaches to it literally, then, it can solve itscapital structure problem in the long term. In the last chapter of paper, dynamicoptimization of commercial bank’s capital structure model is putted forward and itsempirical research will be done in the future. |
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