Asset Allocation Of Chinese Commercial Banks Under Capital Regulation

The topic is the asset allocation of Chinese commercial banks underthe more and more strict capital regulations. The research starts with briefintroduction of theories concerning commercial banks’ asset allocationand capital regulation; then it talks about international regulationsincluding Basel III and domestic supervisory laws. With financial data of16publicly listed Chinese commercial banks it starts empirical study withstatus of banks’ asset allocation including important factors like totalasset, credit asset, capital adequacy ratio and compares between differenttypes of banks. The second part of empirical studies contains econometricmodel regression results analysis and focuses on the dependencerelationship between banks’ asset allocation and capital regulation whichare represented by credit asset ratio and capital adequacy ratio. Last partis regulatory suggestions based on result analysis of empirical studies.The main conclusion is capital regulation has significant impact onChinese commercial banks’ behaviors concerning asset allocation, yetcurrently banks have very limited business types and put too muchemphasis on loan assets. It is suggested banking regulators manage off-balance sheet activities more strictly and improve regulatory lawframework.