Study On China Commercial Bank’s Capital Adequacy Ratio Regulation Under Basel Ⅲ

Capital is very important for the bank’s business."Basel Capital Accord" of1988established the core position of the bank’s capital adequacy ratio regulatory. While2004’s "The New Basel Capital Accord" identified the three pillars as the core of the prudential supervision regime. Because of the lobal financial crisis in2007,the capital adequacy management concept which Basel Ⅱ has insisted in is being challenged and questioned. In this case, the "Basel Ⅲ" was promulgated, establishing a unified global bank capital regulation new rules. In the end of2012, Europe and America both said to postpone Basel Ⅲ. China Banking Regulatory Commission officially released the "commercial bank’s capital management approach (Trial)" in June2012, and formally implemented in January1,2013, which marks the Chinese version of Basel Ⅲ."Capital approach" totally introduced the latest capital regulatory requirements of Basel Ⅲ. Its implementation will constrain the extensive expansion of commercial banks, forcing banking business transformation. China’s banking sector may face a series of challenges such as the slowdown of the scale and the pressure of capital supplementary.In this context, referencing to foreign and local scholars on capital regulatory, this paper analyzed Chinese commercial banks ’capital regulatory issues. Firstly, briefly describes the content of the regulatory capital adequacy ratio, and then describes the evolution on the international capital regulatory regime and the China’s commercial banks capital adequacy ratio. Finally, analysis the impact of "Basel Ⅲ" more stringent regulatory capital requirements to the China’s commercial banks. And then, analyses the problem of the Chinese commercial banks’ capital regulation and the capital adequacy ratio situation. According to the relative finance report of the listed bank, Chinese commercial banks’ capital adequacy ratio reach the standard in total and it haven’t suffer obvious effect after the new policy being put into effect. Besides, it conducts empirical analysis on the Chinese commercial banks’ capital adequacy ratio of effective from the capital management and regulatory capital arbitrage. To the capital management, taking17 listed commercial banks as a sample, through the establishment of econometric models, empirical analysis for2009to2013quarterly financial data finds that China’s listed commercial banks did not approach capital management operation for the purpose of raising the capital adequacy ratio and with the way of loan losses reserves. By2004to2012commercial banks issue on the subordinated debt, it shows that in recent years, commercial banks have generally adopted through the issuance of subordinated debt to raise supplementary capital. In regulatory capital arbitrage, with the plot, through comparative analysis on the commercial banks equity/total assets ratio and core capital adequacy,we concluded that China’s listed commercial bank may exist the possibility of regulatory capital arbitrage, which shows that commercial banks’ capital adequacy ratio lack effectiveness. Then, analyzes the possible causes of commercial banks capital adequacy ratio’s lack of effectiveness from the capital regulatory arbitrage, pro-cyclical capital regulation and operation of high leverage. In view of the deficiencies of commercial banks’ regulatory capital adequacy ratio, explore countermeasures to improve the effectiveness of the bank’s capital adequacy ratio, providing reference to the regulatory authorities and the commercial banks. The proposals have five aspects. The first one is to establish counter-cyclical mechanism for capital regulation. The second is to improve market discipline mechanism of commercial banks. The third is to build a diversified capital replenishment channels. The forth is to strengthen the balance sheet business regulation. The fifth is to establish regulatory capital incentives mechanism.