| From 2007, the procyclical effects of capital adequacy requirements for Chinese banking and related counter-cyclical policy issues, have received great concern and attention of academia and decision-makers. As China is still in a developing socialist system transition period,the implementation of capital adequacy requirements have some specific characteristics: Institutional transformation, developing countries and property rights system. In this context, in order to understand the influence mechanism of procyclicality of capital adequacy requirements, this dissertation based on capital adequacy requirements as a starting point studys behavior and impacts of Chinese commercial banks under the capital supervision, proposes relevant policy conclusions.This dissertation puts forward three questions: first, whether procyclical effects of capital adequacy requirements exists in China, what are the specific performance. Second, what are the different performance and special characteristics of procyclical effects for Chinese banking, compared with developed market economies. Third, how to overcome the procyclical macroeconomic impact of the capital adequacy requirements, how to combine micro-prudential management with macro-prudential management to improve the effectiveness of capital regulation.In this paper, with a large number of literature and statistical data, basing on the actual effects of the implementation of Chinese regulatory capital adequacy ratio, drawing on the macro economic policy analysis model, we has carried on the empirical and theoretical analysis that is behavior of commercial banks under the supervision of the capital and its economic effect, to answer three questions and get four points research results:a. Based on the extension of the existing theoretical model and from banking microscopic behavior, Chinese procyclical effects exist by the capital adequacy requirement as the core of the capital regulation.b. The regulatory authorities have an accurate understanding of the economic situation, carefully adjust the risk sensitivity of capital adequacy requirements, and the leverage ratio is indeed effective supplement capital adequacy regulation.c. The procyclical effects of capital adequacy requirements will not only facilitate changes of banking business model, also changes the loan interest rate, the loan amount, the actual output fluctuations.d. Through unbalanced panel data of 120 banks from1999-2013, we used GMM equation in DPD to get there is a negative correlation in Chinese commercial banks ’ capital adequacy ratio and macro-economic fluctuations, which explains the procyclical effects of capital adequacy requirements do exist. Meanwhile, we find the Government for capital injections, stripping toxic assets in the banking sector and statutory capital adequacy requirements from different extent undermined the procyclical effects of capital adequacy requirements.The innovation of this paper is mainly reflected in four aspects: first, in this paper, using the detailed data from four aspects summarizes the capital adequacy requirements of procyclical effect, that the capital adequacy ratio change, from a certain extent affected the Chinese banking profit growth rate, have forced banks to gain more by non interest income business model innovation. Second, we explain the controversy between procyclical effects of capital adequacy requirements and counter cyclical effect. Third, we theoretically explain the leverage ratio supervision is an effective supplement to the regulatory capital adequacy ratio. Fourth, in the research method, this paper selects system GMM dynamic panel estimation methods, combined with the robust fixed effects panel model and hybrid least squares method of static test, to do empirical test of the capital adequacy ratio requirements of procyclical effect. The data covers an economic cycle, 120 banks can effectively explain the China banking, empirical results show that capital adequacy requirements China banking procyclical effect exist.
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