The Effect Analysis Of Perpetual Bond Improving Capital Structure Of City Commercial Bank Of China

With the introduction of Basel III and the confirmation and implementation of the final version,as well as the introduction of new regulations on capital management and other regulatory policies,domestic banks are facing stricter supervision,the increase of capital consumption and capital requirements of commercial banks,and commercial banks generally face the problem of capital supplement.At the same time,in terms of capital structure,although most commercial banks meet the regulatory requirements of capital adequacy ratio,there are problems such as sufficient core tier 1 capital,weak other tier 1 capital,and relying on core tier1 capital to supplement tier 1 capital.At the same time,the capital replenishment channels are very narrow,especially the city commercial banks are mostly small and medium-sized banks and non-listed banks,small scale financing is limited.The issuance of commercial banks’ permanent bonds has broadened financing channels for smaller and less profitable city commercial banks and promoted their capital structure improvement.This paper mainly studies the effect of the issuance of perpetual bonds on the improvement of capital structure of city commercial banks.On the basis of explaining and analyzing the related concepts and internal and external motivations of the issuance of perpetual bonds,this paper discusses the current status of the issuance of perpetual bonds by city commercial banks,and takes the Bank of Hangzhou as an example to analyze the changes of various indicators after the financing of perpetual bonds.On this basis,this paper selects the sample data of perpetual bonds of 76 city commercial banks from 2019 to 2021,and uses OLS regression model to empirically analyze the improvement effect of capital structure of city commercial banks after issuing perpetual bonds,in which other tier 1 capital adequacy ratio is used as a measure of capital structure.The main conclusions of this paper are as follows:perpetual debt is a tool for city commercial banks to supplement other tier 1 capital with low cost and high efficiency;The empirical results show that the issuance of perpetual bonds has a significant positive effect on the improvement of capital structure of city commercial banks.In addition,there are still some problems in the issue and investment of perpetual bonds.Therefore,this paper will put forward some suggestions for future development.