Capital Management Behavior Of Leverage Ratio And Loan Loss Provision

The CBRC formulated four new regulatory tools for commercial banks in May 2011.The leverage ratio and the loan loss provision have the function of capital management.After 2012,China's economy moved from high-speed growth to medium-high growth.In 2015,"deleveraging" was taken as a key task in the supply-side structural reform.The 2018 meeting of the political Bureau of the CPC Central Committee continued to emphasize the importance of firmly doing a good job of "deleveraging".Under the background of the current downward trend of our economy and the high leverage ratio,capital management of commercial banks plays an important role in Macro-control.Firstly,exploring the capital management behavior of commercial banks from the perspective of leverage pro-cyclicality based on the micro-data of 140 commercial banks in China from 2006 to 2017.Meanwhile,investigate the impact of wholesale funding strategy on leverage pro-cyclical behavior.Secondly,the capital management index is added to the motivation of loan loss provision's earnings management for further extended.This is a more comprehensive and in-depth research of the capital management behavior of commercial banks.The research is of theoretical and practical significance to treat leverage ratio and loan loss provision correctly and to strengthen prudential supervision and classified supervision of commercial banks.The results show that:(1)the leverage ratio of commercial banks in China is pro-cyclical.The faster the leverage ratio increases,the stronger the pro-cyclicity.(2)Wholesale financing can alleviate the pro-cyclicity of leverage.The slow-release effect is most significant when the scale of assets is small,the proportion of wholesale financing is relatively high and the leverage ratio is low.(3)The promulgation of the notice in 2014 controlled this slow-release effect and strengthens the pro-cyclicity of leverage.(4)Commercial banks have capital management behavior using(excess)loan loss provision,and this kind of behavior is more significant in listed banks and high capital adequacy and liquidity banks.(5)Capital management behavior for(excess)loan loss provision increased after 2013.