The Research On The Impact Of Capital Buffer On The Cyclicity Of Credit Behavior Of Chinese Commercial Banks

The financial crisis caused a global economic recession in 2008 and exposed the disadvantage of the pro-cyclicality of the banking system.Therefore,in order to reduce pro-cyclical effect of banking system,Basel III introduced macro-prudential regulation and proposed the counter-cyclical capital buffer that demand banks to increase capital buffers during the economic boom in case of an economic recession.China's regulator followed up in time,and issued "Administrative Measures for the Capital of Commercial Banks(for Trial Implementation)" established on January 1,2013,which proposed macro-prudential regulation framework.However,in most cases,capital buffer actually held by banks is often not exactly the same as that the regulatory requirements.So,what is the relationship between the capital buffer actually held by Chinese banks and the fluctuation of the economic cycle,and whether the adjustment behavior of the capital buffer can reduce the pro-cyclicality of credit behavior,which needs further discussion.Based on the review of relevant domestic and foreign literatures,firstly this paper introduces the relevant provisions and the current situation of capital buffer in China and its adjustment behavior with the fluctuation of economic cycle.Secondly,this paper made a theoretical analysis of the pro-cyclicality of credit behavior and the impact mechanism of capital buffer on bank credit behavior.Thirdly,this paper constructed the dynamic panel model with the annual non-equilibrium panel data of 55 commercial banks in China from 2005 to 2017 and divided the samples into listed banks and non-listed banks for testing respectively.Based on the above research,the following conclusions are drawn in this paper:(l)The capital buffer of listed Banks and economic cycle show positive fluctuations,while the capital buffer of non-listed Banks and economic cycle show negative fluctuations.Listed Banks have been forward-looking,because they can increase their capital buffers during the economic boom in order to absorb losses during the economic recession,while non-listed Banks have been short-sighted.Since the implementation of the capital buffer regulation in 2013,banks have to improve the capital buffer in the context of economic downturn,which leads to the trend that capital buffer fluctuates inversely with the economic cycle.(2)The capital buffer of both listed and unlisted Banks in China changes inversely with the credit growth rate.The capital buffer of listed banks can slow down the pro-cyclicality of credit behavior and smooth the fluctuation of economic cycle.The capital buffer of non-listed banks cannot slow down the pro-cyclicality of credit behavior and smooth the fluctuation of economic cycle.The new capital regulation implemented in 2013 have enhanced the restraining effect of capital buffer on credit growth.As long as banks increase the capital buffer during the economic boom,they can more effectively slow down the pro-cyclicality of credit behavior and smooth the fluctuation of economic cycle.(3)The credit growth rate of listed Banks changes inversely with the economic cycle,while the credit growth rate of non-listed Banks changes positively with the economic cycle,that is,the credit behavior of non-listed Banks is significantly pro-cyclical while that of listed Banks is not obvious.Because listed Banks undertake imperceptibly the social responsibility of maintaining economic stability and smoothing economic cycle.In the economic boom,listed Banks respond to national monetary policies to reduce the credit growth rate.Finally,this paper proposes some relevant policy suggestions based on the above research:for commercial banks,firstly,non-listed banks should be forward-looking,secondly,new financing channels should be expanded,thirdly,commercial banks should change the profit model actively.For regulators,firstly,the regulatory authorities should improve the capital regulation mechanism and make full use of the capital regulation to adjust the credit behavior and macro-economy,secondly,regulators should make different regulation for different types of banks.