A Study On The Impact Of Capital Regulation On Banks' Profitability Based On Structural Equation Model

The international financial crisis makes financial order into chaos, in order to change the policy failure of financial supervision, the Basel Committee promulgated the "Basel ?", improve the capital adequacy ratio at the same time also introduced new regulatory indicators such as liquidity, aimed at improving banking cope with risks and the ability to absorb losses. Our Banking Regulatory Commission, according to their requirements in June 2012 issued a "commercial bank's capital management approach (Trial)" enhanced regulatory capital, to further improve the capital adequacy requirements, the regulatory core capital position has not changed but further strengthened. Capital regulation improves the ability of commercial banks to cope with risks, but according to the new capital measurement, all levels capital are appeared significantly shrunk. The new regulatory capital requirements will bring what kind of impact of commercial banks'profitability? The discussion of the problem are very meaningful for commercial banks and regulators.This paper studies the impact of capital regulation on the profitability of commercial banks, firstly, combs the domestic and foreign literature the evolution of regulatory capital, analyzes the connotation and evolution of international bank capital regulation, the connotation of commercial bank profitability and influencing factors; On this basis, from the influence degree and path analysis of the impact on the profitability of the banks capital regulatory, pointing out that capital regulation can influence banks behavior by loan asset quality and profitability, regulatory capital will increase to some extent in the bank's risk control capacity, long-term will improve the ability of sustainable development of banks to improve banks' profitability. Based on the present situation of our banks'capital regulation and profitability, the article choose structural equation model as the model of empirical research.In order to guarantee the systematic and comprehensive, the article selects diversification index, using March 2009-June 2015 quarterly data of 16 listed banks for fitting and analysis of the equation model. Studies have shown the capital regulation had a indirect impact on the profitability of commercial banks by restraining deposits and loans expansion and improving asset quality. Finally, based on the analysis of the text, from establishing the sustainable development of capital complement mechanism, promote the transformation of business model and profit model and so on, put forward countermeasures to improve profitability for commercial banks.