The Research Of Capital Regulation,Market Competition And The Stability Of Banks

As an important part of Chinese financial market,the stable operation of commercial bank is of great significance to the financial system and the national economy.In order to prevent and defuse financial risk,the capital regulation of Chinese banking industry is also deepening and improving.At the same time,under the background of the banking transformation and the rapid development of new financial industry,the competition pattern of the banking industry is also undergoing important changes.In order to prevent systemic financial risk,the banking industry should maintain the stability of operations under the influence of external capital regulatory pressure and market competition?This paper incorporates capital regulation,market competition and bank stability into the same analytical framework to study the effects of capital regulation and market competition on the stability of banks.This paper uses the principal component analysis method to synthesize the comprehensive indicators that reflect the stability of bank operations.Based on the data of 48 banks in China from 2004 to 2015,the GMM estimation method is been used in the empirical test.The conclusions are as follows: Firstly,the press of regulation has significant negative impact on the Chinese banks and has less negative impact on small banks than large banks;Secondly,market power is conducive to improving the stability of banks and there are no significant differences in the impact of different types of banks;Thirdly,the interaction of market power and regulatory pressure significantly reduce the stability of large banks while increase the stability of small banks.With the increase of capital regulatory pressure and the competitiveness of the banking industry,the bank's stability has become significantly more sensitive to regulatory pressure and market power.In addition,the financial crisis has strengthened the dynamic consistency characteristics of banks.Based on the above results,combined with the actual situation of China,this paper put forwards some policy recommendations.