The Capital Growth And Financing Choice Of China’s Commercial Banks

Commercial bank capital is closely related to the bank’s risk bearingcapacity and stability of the whole financial markets. The Basel III andChinese capital regulation have exerted even more pressure on the bank.With the growing assets and the risk of profit decrease，commercial banksare now facing huge capital gap under the strict regulation.This paper analyses the development and situation of the Chinesebanking capital management, then study16listed banks to find how thecapital constraint and other factors influence on banking capital growthand financing choice. The result is that China’s banking capital meet therequirement overall, the main reason of great credit gap is the risingcredit asset. The big-size banks face less capital pressures and are moreeasily to get external investing. The statistical data show that the growthof bank’s capital is closely related to the capital constraint. Bank willmake the Equity financing when facing more pressure on tier one capital,and the bank will have a capital buffer concept, they will make thefinancing plan in advance in case of the failure of meet the requirement.Banks with higher ROE tend to implement equity financing, otherwisemany banks take debt financing as regular capital supplement means. Theamount of the equity financing will be lager if the capital buffer is less.Finally, this paper compares the local banks with the famousinternational banks, finds the characteristics of china’s bank capital structure and gives advice on banks’ capital management combined withlatest regulation.