Study On Pro-cyclicality Of Capital Adequacy Ratio In China

The financial crisis in2007has made a great impact on the stability of the world’s financial system,and brought us a completely new way of redesigning the regulatory system of the banks.The crisis has contributed to the regulatory theories by drawing our attention on "Procyclicality" and "Macro-prudential Regulation".Generally speaking,the procyclicality is the result that the variables in financial system,like fluctuations in business cycle,strengthen the economic cycle of positive feedback from the trend of increasing volatility of economic cycles.In this article,we try to analyse the build-up of procyclicality and its conductive mechanism.Additionally,we buid an incomplete panel of Chinese13commercial banks from2005-2011and estimate an equation for the behavior of capital buffers that includes an indicator of the business cycle. At the end of this article,we try to put forward some means to mitigate the effect of procyclicality,and analyse way of build-up of macro-prudential regulation system.