The Counter-cyclical Of Capital Buffer Of Hunan Province Banks Impact On Size Of Credit

Bank capital buffers make it possible for banks to cover part of loss bybanks’own capital commitments before it suffers losses in assets, therefore, capitalbuffers are clearly identified as one of the policy tools to reduce CIS-cycle issues.However, the real economy hard hit by the international financial crisis has raiseddiscussions of bank capital buffers and periodic behavior and in the credit process onthe banking sector.Scholars at home and abroad have different opinions on cyclical capital buffers.It has been a controversial issue on capital buffers’ performance in the economiccycle. Due to China’s unique political and economic system, the financial sectorstarted late, Therefore, it lags behind international banks for Basel II regulatorycapital. As a major agricultural province in China, Hunan province and its bankingsector has a unique way of doing business. Therefore, it is very important to develop asuitable system of bank capital buffers of Hunan province both for Hunan’s financialhealth and stable development of China’s financial industry.By using annual panel data from2005to2013in this article of22corporatecommercial bank in Hunan province, This paper studies the impact of periodicity ofbank capital buffer,capital buffers in the economic cycle to credit behavior byempirical research on the DK standard model and OLS Panel.The conclusions differfrom many scholars at home and abroad. It found that it has an obvious countercyclical between corporate commercial bank capital buffers and under the economiccycle in Hunan province, banks’ lending practices has a positive correlation with abank’s capital buffer. When the economic upswing that banks will raise the ratio ofcapital buffers, and when an economic downturn, free up capital buffers and lessenpressure on the Bank’s capital, suggesting that banks adjust their capital buffers tocope with economic volatility is positive.However, viewed from the oppositedirection,increased capital buffers do not reduce credit growth.In response to theseresults,this article will make relevant policy recommendations,hoping to provideseffective theoretical basis for the healthy development of the banking sector in HunanProvince.In response to these results, relevant policy recommendations presented inthis paper. Although the capital buffers of Hunan provincial banking iscounter-cyclical, but capital buffers on the credit scale effect is not obvious. Therefore, it can be increased their own decision-making powers, broadeningchannels of bank financing and profitability and improving the internal managementlevel and service quality, and will help improve the banks ’ capital buffers countercyclical. And by strengthening credit management, carry out credit policy and theimprovement of countercyclical measures to strengthen bank capital buffers and forceon credit.