The Impact Of Capital Adequacy And Liquidity On The Growth Ability Of Listed Banks

Listed bank is a very important representative of banking industry. Development, growth capacity of banks will cause stakeholders’concern. In recent years, while listed banks growing, they are facing increasingly fierce competition. There are competitions among banks and there are also non-bank institutions in these competitions. With market-oriented interest rate, the "spread" profit model is facing enormous challenges and study how to maintain the growth ability of listed banks is very important.In the financial management theory, commercial banks have three principles, they are the principles of safety, liquidity and profitability. In this paper, the capital adequacy ratio and leverage ratio are on behalf of the safety of banks. Liquidity ratio reflects the bank’s liquidity. And indicators which reflect profitability, growth potential, innovation of listed banks form listed banks’growth ability. Capital is a safeguard for the security of the bank and at the same time have an important impact on the bank’s growth ability. Liquidity management is an extremely important part on the management of commercial banks. Lacking liquidity, the bank will take a high price in order to maintain normal business dealings. What’s more a serious shortage of liquidity could lead to wave of bank run. Once the capital strand breaks, banks even the entire financial system will suffer extremely serious harm. Research on how capital adequacy, liquidity impact listed banks growth ability have an important meaning. It can promote capital management, liquidity management and finally promote the growth of listed banks.The article is divided into live parts. The first part includes topic background, the significance, the literature review, as well as the framework, the innovation and so on. In the second part, the paper expounds the connotation of bank growth ability, related concepts and theories of capital adequacy and liquidity. Then, it analyzes the influence of capital adequacy and liquidity on the growth ability of listed banks. The third part introduces listed bank growth ability index and obtains the comprehensive score of the growth ability with entropy method. It finds that the growth trend of listed bank declines slightly and the score of listed non-state-owned banks is higher than that of the listed state-owned banks. Then the paper gives some analysis. The fourth part is the empirical analysis. Data comes from 15 listed banks with time from 2008 to 2014. This part uses the panel data model to analyze the impact of capital adequacy and liquidity on growth ability of listed banks. At the same time, this part also makes comparison between listed state-owned banks and listed non-state-owned banks. The conclusion is that the capital adequacy ratio and leverage ratio of listed banks have restrictive effects on the growth of listed banks. Liquidity and growth ability of listed banks are positively related, but this relationship is not obvious. The impact of capital adequacy ratio and leverage ratio on growth ability of the state-owned banks are not obvious, but the relationship between liquidity and growth ability is negative. The result also show that capital adequacy ratio, leverage ratio and growth ability of non-state-owned listed banks have a negative correlation. However, the correlation between liquidity ratio and growth ability are positive. Finally, the paper makes analysis according to the empirical results. The fifth part proposes recommendations which make full consideration on the theoretical analysis and empirical analysis, market-oriented interest rate as well as the listed banks’own strengths and weaknesses to strengthen capital adequacy management and liquidity management and improve growth ability of listed banks.