Impact Of New Capital Regulations On The Safety And Profitability Of Commercial Banks In China

The financial crisis in 2008 has made destructive impact on the global economy,as the financial innovation and financial reform continues to go deeper,the disadvantages of banking capital adequacy ratio for regulatory capital alone appeared constantly.Although,before the crisis Europe and the U.S.are kept high capital adequacy ratio,there is still no way to avoid the damaging effects of the financial crisis.The reason is that many banks have made profits by sharply raising their off-balance-sheet leverage.Therefore,the capital adequacy regulation cannot reflect the risk of bank capital levels.Based on this situation,In September 2010,Basel ?put forward the new indicator--leverage ratio,which set the low limit of 3 percent to measure the risk of commercial bank.The agreement has made leverage regulation a new benchmark for global banking regulation.In June of 2011,The China banking regulatory commission formally issued the Leverage ratio management method of commercial Banks which set the low limit of 4 percent of the leverage ratio regulation line.From now on,the leverage ratio and the capital adequacy ratio work together with the asset risk,which plays an important role in the off-balance-sheet business,financial innovation and capital regulatory arbitrage restriction.This article selects 61 commercial Banks' financial statistics in China from 2007 to 2016,and divided them into four types:State-Owned Commercial Banks,Joint-Stock Commercial Banks,City Commercial Banks and Rural Commercial banks.From the perspective of macro-economic environment,the characteristics of banks and the supervision of the regulatory authorities to conduct the empirical research.The purpose is to analyze the impact of new capital regulation on all kinds of banks'safety and profitability.Then draw a conclusion about it.New capital regulations can control the risk of commercial banks,but in terms of profitability,in the short term it may produce negative influence,in the long run it is conducive to the stability and continuous development of commercial banks.The article draw a comprehensive analysis on the double capital regulation of capital adequacy ratios and leverage ratio on commercial banks,based on the experience and empirical analysis,this paper makes recommendations from the perspective of the bank and the regulatory authorities,thus to better solve practical problems.