Research On The Impact Of Capital Adequacy Regulation On Listed Banks’ Credit Behavior

The financial crisis originated in the United States has shaken the global economy, especially to the banking industry, since then strengthen the supervision of the financial sector has become the consensus of the banking industry. As regulatory authority focus on banking supervision, capital adequacy regulation has become the core of banking supervision. Capital adequacy regulation is important for maintaining a stable banking sector, promoting fair competition and protecting the interests of depositors. However, after the implementation of the capital adequacy regulation, both developed and developing countries’ domestic economy suffered different degrees of credit crunch. This situation forming a handicap to economic growth. The issue has attracted wide attention that whether the ca pital adequacy regulation would cause fluctuations in the economy, when it guarantees stable operation of the banking industry.Based on the previous researches of capital adequacy regulation, we studied the impact of capital adequacy regulation on listed banks’ credit behavior. Compared with the domestic previous studies, this paper extends the measure angles of credit behavior, not only in the longitudinal angle measures the behavior of bank credit expansion, but also to study the elements of loan size a nd loan structure. Through the qualitative analysis of the impact of capital adequacy regulation on listed banks’ credit behavior, we found the path of capital adequacy regulation effecting credit behavior. Then, based on the theoretical analysis, this pap er empirically tested banks credit behavior reaction from three aspects of the credit growth, the size of credit, loans’ structured, in the face of capital adequacy regulation. The sample select 14 listed banks in China from 2004 to 2014 quarterly panel data. This paper use Eviews software to test samples with multiple linear regression analysis. Finally, according to the empirical results, we provides some relevant suggestions to improve the capital regulation. According to the theoretical analysis and empirical results, we found that the capital adequacy regulation of credit growth and the scale of listed banks have a credit tightening effect, and this effect is asymmetric. The impact of capital adequacy regulation on listed banks’ credit behavior is different, when the bank’s capital adequacy ratio is higher than the regulatory requirements or not. In addition, studies have shown that the capital adequacy regulation will affect the behavior of listed banks’ credit concentration. The more stringent regulatory requirements, the greater number loans lent by listed banks to the large enterprises. Therefore, this paper proposes two policy recommendations: First, the regulatory authorities should treat banks of different capital levels using different regulatory policies; Second, we should continue to improve capital regulation,so that policies could guide banks credit behavior.