Empirical Analysis On The Effect Of Capital Adequacy Ratio On The Liquidity Creation Of China's Commercial Banks

Liquidity creation is a function of generating liquidity for enterprises and the society in the absorption of deposits and the flow of loans by commercial banks.Basel III and Rules for Regulation the Capital Requirement of Commercial Banks,the former was released after the financial crisis in 2008 and the latter was released by CBRC in 2012,both raised the standard of capital supervision.In recent years,the growth rate of deposits in financial institutions is significantly higher than that of loans,which means the increase in capital adequacy ratio has affected the realization of the liquidity creation.In the case of the current economic downturn,if supervision departments encourage commercial banks to expand their business and increase the supply of liquidity to the society,they have to figure out whether the adjustment of capital adequacy ratio will affect liquidity creation and the way of influence.This dissertation firstly calculate the liquidity creation of more than 40 commercial banks by the method raised by Beger and Bouwman combined with actual situation.Then it classify those banks and take empirical analysis of those adjustments through panel data.What's more,it combine the result with the relationship between capital adequacy ratio and liquidity creation and analyze the final result.It confirms that the relationship between capital adequacy ratio and liquidity creation is different to various kinds of commercial banks.To state-owned commercial banks,the increase of capital adequacy ratio will increase the liquidity creation.As national commercial banks and regional banks,the increase will bring negative influence.In the end,the dissertation make a conclusion and put forward some suggestions toward commercial banks and banking bureau.