Research On Refinancing Behavior Of China’s Listed Commercial Banks

Listed banks refinancing is the behavior of bank obtaining capital after its initial public offering. When domestic listed banks’ capital adequacy cannot meet the regulatory requirements or the need of bank risk management, they usually tend to security markets for complimentary capital. The specific form includes Allotment, issuance of new shares, issue convertible bonds and subordinated debt. High debt ratio is the characteristic of commercial banks when compared with other industrial and commercial enterprises, thus commercial banks faces strict regulatory requirements of capital adequacy level. Based on the reasons mentioned above, the purposes of domestic listed banks refinancing is to improve the bank’s capital adequacy level so as to meet the requirements of the regulatory authorities.Related data showed that16listed banks of China had obtained more than500billion Yuan through refinancing on capital markets in2011, and refinancing volume presents a trend to continue expanding as we can see from the latest refinancing plan put forward by listed banks in the beginning of this year. Since2004, China’s listed banks have refinanced through capital markets more than60times, each refinancing plans has different scales. Such frequent and huge refinancing event has posed a deep impact on China’s capital markets and banks itself.After the outbreak of financial crisis, China began to implement an active monetary policy, in which commercial banks assume the role of the major donors of liquidity in the economic field. But such a large credit expansion led the decline in the quality and quantity of domestic listed banks’ capital. A low level of capital poses challenges for listed banks and threatens their ability to sustained profitability and withstands risks.On the one hand, the unprecedented growth of credit scale put the level of capital under huge pressure within the banking system; on the other hand, capital regulatory standards have been elevated to a new level, restricting bank refinancing behavior from the outside. In this context, refinancing is undoubtedly a shortcut to solve the problem of banks’capital lack. Thus, China’s listed banks refinancing behavior begin to boom. Because of the large-scale and high frequency, banking refinancing has caused widespread concern. Bank refinancing behavior not only has a huge impact on their business operations performance, but also affects the development of the national economy.This paper is based on the background of China’s listed commercial banks’ massive refinancing. In the thesis, we compare the different ways of refinancing, and summarize refinancing behavior research at home and abroad. We also use statistical analysis to reveal refinancing status quo and explain the reasons for the frequent refinancing of listed banks. We use event study to do research on refinancing announcement. The sample ranges from January1,2005to January2012. In our test, we find that the refinancing announcement effect exists, and the impact on the share price of different refinancing ways does vary. The empirical results of listed bank refinancing announcement effect verify the theory of price pressure hypothesis and information-release hypothesis to some extent, and then provide some reference to the choice of the financing for the listed banks.The article pointed out that to solve the capital-lack puzzle and pursue further development, commercial banks need to improve profitability and strengthen internal capital accumulation mechanism.The future development trend is mixed-operation and internationalization of capita. The domestic commercial banks undergo "going out" strategy and allocate resources worldwide by refinancing.Therefore; the study of the behavior of China’s listed banks to refinance is valuable both in theory and in practice.