The Research Of The Effect On The Ability About Resisting Risk Put By Capital Adequacy

The financial health and stability is of vital significance on a country’s economy, asthe most important financial medium, banking influents the development of financialsystem profoundly and lastly. Due to its consequence and feature, banking industry isthe one which has been supervised most frequently in the world. Hence, every countryhas carried out strict supervision on the core of capital adequacy ratio. In the force ofcapital adequacy regulation, the commercial banks must keep some degree of capitalfor the sake of being on guard of the crisis in big risk and depression, thus to protectthe whole financial system from being destroyed by the external environment.The existence of market failure, deposit insurance and moral risk makes the capitaladequacy supervision becoming necessary; capital adequacy has been brought intobanking regulation system as the measurement of risk. The strength of financialglobalization and financial innovation has push the banking industry into a vortexwith more and more complex risk, then there are more and more the potential crisis.The Basel Banking Committee has issued “Basel Accord”,“New Basel Accord” and“Basel III” in succession to establish global capital supervision standard and improvethe measurement of capital adequacy unceasingly. In order to take challengepositively, huge changes has happened in our country’s banking industry. The firstchange was our government canceled the credit scale surveillance which had beenthere for more than a decade referring to the “Basel Accord” in1988. The secondchange was the promulgation of “Implementing the Capital Adequacy Standards” onthe reference of “New Basel Accord”, this Implementation asked the commercialbank’s capital must fir the credit risk of portfolio. Until the end of2010, thecommercial bank’s capital adequacy in our country has exceeded the minimumsupervision standard of8%, but our country’s banking industry has been persecutedby the insufficiency of capital adequacy essentially and the backward of capitaladequacy regulation etc.So as to checking the influence the capital adequacy regulation has put on theability of resisting risk among our commercial banks，this essay lead the simultaneousequation of Shrieves and Dahl into empirical evidence，and made a Three-stage leastsquares for panel data on the basis of study both at home and abroad, discussing thechanges for capital and risk under the regulation pressure. The result finds that thecapital adequacy in our country can obviously reduce the risk in commercial banks, and the effect on enhancing capital adequacy and decreasing risk made by regulationpressure is quite clear. On these bases, this essay put forward a proposal on increasingcommercial banks’ ability in resisting banks’ risk in our country, as from the point ofbank-self and regulation government respectively, in that can put the banks’ inneradvantages and regulative policy’s permanency into full play to increase the capitaladequacy and reduce the level of risk.