Analysis Of The Impact Of Leverage Regulation On The Profit Level Of China's Commercial Banks

The outbreak of the global financial crisis triggered the collapse of the financial system around the world.The real economy began to disintegrate,a large number of financial institutions could not withstand a series of economic problems caused by the crisis which is due to the poor management.Instead,they chose to declare bankruptcy and the price bubble of a large number of assets began to burst.People choose to avoid risk and sell financial securities,causing the stock market to collapse.After the financial crisis broke out,and then analyzed the causes of the financial crisis,experts found that the most important reason was that Western developed countries in the past few decades have been expanding the assets of commercial banks by carrying out high-leverage and high-risk businesses.The outbreak of the financial crisis has hidden dangers and commercial banks have carried out some unreasonable means of asset transfer in order to meet the regulatory requirements of capital adequacy ratio,thus making financial institutions' ability to resist risks declining.The outbreak of this crisis has triggered the thinking and exploration of financial institutions in the-world.In 2010,the G20 summit was held in Seoul.The countries participating in the conference signed the Basel Accord ?,which included the leverage ratio in the financial supervision index and supervised the com,nercial banks in China in line with the capital adequacy ratio.In 2015,China promulgated the "Measures for the Management of Leverage Ratio of Commercial Banks(Revised)".In this case,the leverage ratio of China's commercial banks is not less than 4%.Under the increasingly strict regulation of leverage,it is unknown whether the profitability of China's commercial banks will be restricted or even reduced.As the main body of the financial industry,commercial banks occupy a place in the Chinese economy.The business situation of commercial banks determines the overall economic situation in China,so many experts and scholars pay close attention to the profitability of commercial banks.As a regulatory indicator of the capital adequacy ratio,leverage ratio will inevitably affect the profitability of commercial banks.Therefore,this paper explores the impact of leverage regulation on the profitability of China's commercial banks by observing the leverage ratio of some listed commercial banks and the profitability of commercial banks.This paper selects 16 listed commercial banks in China from 2009 to 2018 as sample banks,and finds the leverage ratio of each commercial bank and the data of two profit indicators in the annual reports of various commercial banks.Besides the leverage ratio is the explanatory variable,the total return on assets and the net profit are used as explanatory variables to study the impact of the leverage level on the profitability of commercial banks.In order to explore the relationship between leverage regulation and the profitability of commercial banks,this paper first discusses the leverage ratio of commercial banks and its profit sources,impact mechanisms,and then analyzes the 16 listed commercial banks in China during 2009-2018,including the level of leverage and the level of net profit and return on total assets,and descriptive statistics on leverage and profitability indicators can more intuitively see the changes in the self-leverage regulatory policy of profitability since the implementation of the policy,from the theoretical and graphical analysis,puts forward the assumption that the regulation of leverage has a significant impact on the profitability of commercial banks in China.After the theoretical analysis,this paper uses panel data to build a model and conduct regression.The empirical results show that the increase of leverage has a significant impact on the profitability of commercial banks,and the two are positively related.And this paper also tests the heterogeneity of different types of commercial banks.For state-owned commercial banks,the leverage ratio has no significant impact on its profitability,while for non-state-owned commercial banks,it is significant at 1%and presents a positive correlation.Finally,in order to better implement the leverage regulation policy and improve the profitability of commercial banks,this paper proposes different regulations for the supervision of the leverage ratio of the regulators,as well as the disclosure of information on the leverage ratio and the business of commercial banks and the transformation of commercial bank,then give some reasonable suggestions.