Research Of The Effects Of Capital Regulations On Economy In The West Of China

The global financial crisis in 2008 and the bankruptcy sparked regulators' concerns about risk management,thus speeding up the introduction of Basel III which introduced capital and liquidity requirements to improve bank risk management.The differences in implementation and requirements of Basel in China and other European countries may have different effects on the credit of banks and hence macroeconomic development.Therefore,the purpose of this study is to examine the impact of capital regulation on the macro-economy in the west of China.First of all,this article introduces the background,purposes and summarizes the literatures on how capital regulation affects bank credit and how it affects the economy.Second,this paper suggests the development of the Basel.Thirdly,based on the literatures,this paper uses two models to analyze the impact of capital on credit and the impact of credit on the economy.Finally,this paper analyzes the results of the models,and finds that capital has positive impact on bank credit and credit has no significant impact on economy during the first period(2006-2009).While capital has negative impact on bank credit and credit has positive impact on economy after the crisis(2010-2016).According to the results,this paper suggests policy recommendations and points out the shortcomings of this paper and prospects for future analysis.