Research On The Motivation And Effect Of Convertible Bond Financing In The Bank Of China

In recent years,China has been affected by the international economic environment.The quality of commercial banks has declined.At the same time,the expansion of credit business has led to a decline in capital adequacy ratio.The increasingly strict external supervision also puts higher demands on capital adequacy ratio.In this context,commercial banks have rushed to release different refinancing schemes in order to increase capital adequacy ratio,and the issuance of convertible bonds is a broader and more effective way of refinancing in these refinancing schemes.Although the time for the creation and development of convertible bonds in China is not long,China's convertible bond market has developed greatly in the past two years.In 2018,China's major banks began to issue convertible bonds insanely,which greatly exceeded market expectations.This paper conducts an in-depth study on the financing motives of BOC Convertible Bonds and the financing effects generated in the past ten years before and after the existence of the deposit period.The main research objective is to provide some useful reference value for banks preparing to raise funds through convertible bonds.Provide reference for Bank of China and other state-owned commercial banks to enrich research results related to convertible bonds.This paper mainly uses the case analysis method to study the case of the Bank of China's2010 issue of 40 billion huge convertible bonds as a case study.On the basis of the relevant literature on the causes and effects of the convertible bonds and the related theories used in the following,combined with the basic situation of the case bank Bank of China and the issuance process and main contents of the Bank of China convertible bonds,In detail,the relevant indicators are used to further study the motives and financing effects of the refinancing of the use of convertible bonds by the Bank of China in terms of asset quality,debt structure and capital structure,shareholding structure,capital adequacy ratio and stock price changes.The motivations for financing through the issuance of convertible bonds are selected.Relevant indicators are used to prove whether these drivers and the theoretical basis are present,and to find out the internal relationship between relevant theories,motivations and effects.After a comprehensive analysis of the financing motives of the Bank of China through the issuance of convertible bonds and the economic consequences of convertible bondfinancing,it was found that the issuance of convertible bonds by the Bank of China increased the quality of capital and optimized the debt structure,capital structure and shareholding structure.The capital required by the bank is supplemented in a timely and effective manner.At the same time,the convertible bonds issued by the Bank of China have had a positive impact on the future development capabilities and stock prices of Bank of China in a relatively short period of time.Although the issuance of convertible bonds has many benefits for banks,it also creates significant risks.Therefore,in the current hot convertible bond market,banks should increase supervision and avoid a series of risks arising from the issuance of convertible bonds.While properly using convertible bonds for financing,commercial banks should also enhance the creativity of their own capital,enhance the bank's internal financing,and use various financing methods flexibly.China's commercial banks should flexibly use the financing tools such as convertible bonds,carefully choose the timing of issuance,control the issuance scale,and properly design the expiration period to realize the innovation and development of convertible bond financing.