The Impact Of Capital Adequacy Ratio On Commercial Banks’ Engagement In Shadow Banking

Using capital adequacy ratio and shadow banking data of 273 domestic commercial banks from 2008 to 2020,this paper investigates how capital adequacy ratio affect commercial banks’ engagement in shadow banking.A single commercial bank’s capital adequacy affects shadow banking business size by having a strong influence on credit business and venture capital investment business.There is positive correlation between capital adequacies and shadow banking business scale of single commercial bank.Commercial banks with higher capital adequacies are more intended to promote innovative business by developing shadow banking business,improve profitability while meeting regulation requirements.Moreover,capital adequacies have different influence on different types of shadow banking business.Capital adequacies have strong positive influence on due-from-banks assets and available-for-sale financial assets.Capital adequacies have weak influence on purchase-of-resale financial assets.Furthermore,the result indicates that there is a relatively large difference between varies commercial banks at the influence of capital adequacy on shadow banking business.Non-listed commercial banks,city commercial banks and foreign banks have more significant impact.Monetary policy has no significant effect on capital adequacy ratio and shadow banking business while capital regulation policy has more significant effects.