Nonlinear Relationship Between Banks And Bank Regulators TFP Between The Measures

This paper based on previous studies on bank efficiency and its influencing factors, focus on the relationship between regulatory measures and indicators. We believe that financial regulation has entered the stage of dynamic regulation stage, regulatory measures are interacting with the bank efficiency, while the previous studies are almost concerned about how the regulatory measures improve bank efficiency, without thinking what is the perfect situation for regulation to work. Therefore, this paper aims to find out three regulatory indicators-capital adequacy ratio and the reserve ratio, as well as NPL ratio has nonlinear relationship with bank efficiency, which means the bank in different states has different needs towards regulatory measures, only when its properly bank station match its regulation there could receive positive effect as prospect. In addition, there are vary regulation needs based on different banks. In this paper, DEA and R software were used to our empirical study for24banks during six years, and then proved to be nonlinear relationship between the regulatory indicators and the overall efficiency of the bank, while the non-performing loan ratio shows a negative effect on bank efficiency as usual. This proves that emphasis higher capital adequacy ratio and the reserve ratio all the way is irrational, and can not always receive a good result. All in all, flexible and prudent monetary policy and regulatory policy are necessary, and specific analysis the efficiency state of banks then put on a suitable regulatory way. while for bad loans, banks need to focus on reducing them down as down can be. In short, flexible regulatory policy and monetary policy is a necessary requirement of banking supervision, and, in conjunction with internal and external supervision is very important, besides, a reasonable and effective internal controls are helpful...