Research On The Impact Of Leverage Regulation On The Stability Of Commercial Banks

In the modern social economy,the important sign of a country's modernization depends on the degree of development of its financial system.A well-developed financial system can promote the rapid development of the country's economy,while maintaining the stability of the financial system is also an important regulatory goal of a country.Banks is an important part of the financial system.The banking industry has a wide range of businesses and operations,and banks have a high degree of diversification in their asset and liability business.It is known as a"financial department store" and its operating income accounts for half of the entire financial system income.Therefore,the stability of the banking industry directly affects the stability of the entire financial system.The instability of the banking market will cause financial system turmoil.If a bank were bankrupt may lead to the collapse of the entire financial system through the market delivery,which will seriously jeopardizes the national economic security.In the global financial crisis triggered by the US subprime mortgage crisis at 2008,the "high leverage" was considered the chief culprit.As a result,governments have begun to strengthen supervision of financial leverage,requiring financial institutions to "deleveraging" to reduce financial risks.In adapt to the needs of countries for a more complete financial supervision system,Basel III has come out,which means that the regulatory requirements for the international banking industry have reached a historically high level.In recent years,China's financial market has been gradually opening to the outside world the new regulatory requirement is a huge test for China's banking industry.Although the safety of China's commercial banks has been at a relatively high level in recent years,it has also survived in the 2008 financial crisis.However,this has also caused the leverage ratio of China's banking industry to continue to rise and has reached a dangerous level.Under the regulatory requirements of leverage ratio,China's commercial banks have begun the process of leverage regulation.Leverage regulation will have many effects on China's commercial banks.How to maintain the stability of commercial banks and enhance the international competition in this process,and how to guide the healthy development of China's banking industry is a very realistic economic proposition that China needs to face now.This thesis is divided into five parts to study the impact of leverage regulation on the stability of China's commercial banks.The first part is the introduction to introduces the research background and research significance of this thesis,and presentation the research status of domestic and foreign.It is found that although many.scholars have studied the impact of leverage regulation on commercial banks,they all focus on liquidity and profitability,and there are few studies on the impact of leverage regulation on bank stability.This paper takes the bank deleveraging as the entry point,uses the bank stability as the foothold to use the large sample microdata and normative analysis and empirical analysis to explore the impact of deleveraging on bank stability.The second part is an overview of the theoretical basis to introduces and defines the definition of leverage and the indicators for measuring the leverage of commercial bariks.It also discusses the definition and measurement indicators of bank stability,and points out the specific meanings,advantages and disadvantages of the various stability measurement indicators.The third part is the mechanism analysis.Firstly,it describes and analyzes the current situation of the leverage ratio of commercial banks in China.Then discusses the advantages and disadvantages of leverage ratio indicators.Finally,the paper analyzes the impact of the new regulations on the stability of China's commercial banks in terms of profitability,liquidity and security.The fourth part is the empirical analysis.This paper selects the financial data of 26 commercial banks from 2009 to 2018.Through a series of tests on data and models,a variable-intercept fixed-effects multiple regression model had been established.Getting an accurate description of the impact of leverage on bank stability.Finally,the fifth part draws the research conclusions based on the previous theoretical discussion and empirical analysis,and attempts to propose feasible suggestions for the sustainable development of commercial banks in China.It can be seen from the research in this paper that in the long run,leverage regulation will enhance the stability of China's commercial banks,which is conducive to the long-term development of China's commercial banks.At present,China's commercial banks have higher security,the capital adequacy ratios are at a higher level,and their ability to respond to risks is stronger.There is a significant negative relationship between the leverage ratio and the Z-Score.highering the leverage ratio can control the bank's operational risk.Although deleveraging will have a positive impact on stability but it will damage the bank's profitability.Therefore,we must grasp the degree of goodness in promoting the leverage regulation of banks.We must steadily promote the leveraged process of commercial banks,establish a regulatory system suited to China's conditions,and actively encourage commercial banks to transform and innovate.