The Impact Of Capital Adequacy Ratio On The Efficiency Of Commercial Banks In China

Banking is the major part of China’s financial industry, It also penetrate into all aspects of the national economy. Banking homeostasis and efficient operation, not only the development of the financial industry, but also affect the entire main macroeconomic situation. Efficiency is the concentrated expression of the operation of commercial banks, it relates to the future development of the bank. Because of the important role of the banking system in our economy, bank efficiency is directly related to the entire state of health, and the allocative efficiency of social resources,and therefore the efficiency of commercial banks is particularly important. Capital adequacy ratio is an important indicator of national regulators Commercial Banks, it reduces the risk of the bank guarantee safety at the same time also affects the efficiency of the bank. The main article of capital adequacy ratio on bank efficiency,and to analyze the reasons. Based on the commercial banks efficiency theory and capital adequacy ratio theory, this paper draw on the research results from China and foreign, and then make the empirical research based on the panel data of State-owned banks, joint-stock banks and city commercial banks. This paper aim to calculate the efficiency of commercial banks more accurate by SBM-Undersiable which considers both the non-performing loans and slack variables, and analyze the impact of capital adequacy ratio on effectiveness by censored regression, and the main conclusions are as follows. The results show that the bank may overestimate efficiency significantly if ignoring their bad loans, and the bank capital adequacy ratio and efficiency are inverted U-shaped, the bank may increases efficiency and enhance the capital adequacy ratio when it has lower capital adequacy ratio, but it’s not conducive to efficiency gains when the capital adequacy ratio increased to a certain extent, and the operational efficiency of commercial banks heavily depend on the external environment, so it has a strong pro-cyclical.