The Influence Of The Basel Ⅲ To China Economic Stability

The 2008 financial crisis prompted the Basel Committee Basel III promulgated on December 16, 2010. China Banking Regulatory Commission also launched four major regulatory tools, including capital requirements, leverage, provisioning rates and liquidity requirements in four major areas in time, to constitute a new framework for going forward for banking regulation in China. This was called the Chinese edition of "Basel III" for the banking industry. As other countries scramble to make their time to meet Basel III standards, China Banking Regulatory Commission also provided all the country’s banks must meet Basel III requirements at the end of 2016. However, whether the Basel III really contributes to a country’s economic and financial stability, is still worth doing research.This paper tries to start from the background of post financial crisis era and countries are implementing Basel III, through establishing dynamic stochastic general equilibrium model, assuming there are family, manufacturers, bank and government such four subjects in the economic social, considering information asymmetry and Basel III, use pulse response to analysis whether the capacity of China against the economic impact under the Basel III has been enhanced, this enhanced embodied which aspects and conclude whether Basel III regime needs to be improved, and to make appropriate recommendations and provided directions of the improvement.Key findings of the study: from the impulse response analysis, this paper concludes that Basel III contributes to our economic stability and makes disturbance frequency and fluctuation rate, due to the shocks, of the variables decline, and also guides the market players’ expectations. But it also concluded that when the GDP growth rate is higher than the credit growth, the countercyclical capital buffer which computed as the Basel III guides does not work, such approach even reduced the core tier one capital required in a pro-cyclical.The article concludes with some policy recommendations: innovate the method to compute the countercyclical capital buffer, create new method to compute the countercyclical capital buffer in special case. Focus on guide role of the government, give market subjects the right of guides and make market subjects know what the government would for some situation. Actively implement and develop Basel III. Participation and implementation, recommend and impact it will help China communicate with other nations on financial regulatory, Chinese financial institutions develop foreign markets, as well as develop related financial protocols consistent with and conducive to the development of China’s financial institutions in the future.