| The domestic and foreign massive findings indicated that the bank system's healthy development has the huge influence on a country's economic growth and the social welfare.In the economic development process,the main function of bank is collecting the deposit and puting these funds into the area of production.The development of commercial banks will help improve the quantity of savings and enhance the transformation of savings to investment efficiently through the effective allocation of resources.It can also Increase the capital formation and promote the technological progress,so as to keep long-term growth of economy.However,having occurred frequently in recent years,the bank crisis has created huge losses to the economic system.Since 1970,there has been 117 systematic bank crisises and 51 non-systematic banking crisises in both developing country and developed country. The crises caused the economic loss more than GDP 10%averagely every year.At present,Chinese government is advancing the financial reform and the opening-up,so the banking industry competition pattern changes unceasingly.At the same time,the bank system's uncertainty increases day by day and partial unbalanced presents the new characteristic gradually.Therefore,how to enhance the regulatory authority to the environmental variation adaptiveness,how to strengthens bank system's security and how to maintain the bank system stability becomes the most important work to Chinese high speed development.On December 11,2006,China has cancelled Renminbi service region limit and the customer limit of the foreign bank according to the WTO agreement.It means comprehensive opening-up in banking area,so that,the domestic commercial banks have to face the foreign banks challenge and impact directly.Chinese domestic Commercial banks,especially the state-owned commercial banks,have been pursuing market share unilaterally,expanding the management scale blindly and making the potential risks of banking system accumulate continuously for a long time.When the macroeconomy fluctuates,the potential risks of the banking system will burst out.But Since 1997,the worldwide financial crisis proved that if the people ignore the risks of banking system and havethe supervision vacancy,it not only made the commercial banks bankruptcy,but also lead the entire macroeconomic system to long-term disaster.The establishment of Banking Regulatory Commission had demonstrated that the Central authorities showed great concern and worry about the risks of the banking system.It also meaned the monetary policy function and the banking supervision function separated finally which has benn argued for many years.The United States sub-loan crisis has alarmed Chinese commercial banks again in 2007.The overall opening-up in the financial field and the challenges and impacts from foreign banks,how to effectively improve regulation level of China's commercial banks' risk is becoming a fully-fledged reality.Then,how to understand and measure the risks of Chinese banking system and how to appraise the supervisory system's reform in the past years.Whether these reforms has been made some achievement to prevent the risks of commercial banks and whether the present supervision system can be effective under the condition of the comprehensive opening-up of financial industry.This paper will seek to theoretical and empirical discussions and answers concerning these questions,which seems to have been the motive and purpose of this paper is to make a number of theoretical and practical significance. â… .The Review of the Commercial Banks Regulation theory and the Definition of the Related ConceptionsIn recent years,the reseach on the commercial banks supervision have obtained huge development.The bank theory,especially the information economics and the contract theory have provided a profound insight to understand the operation of commercial banks,and offered the optimal analysis tools and valuable conclusions for the design of the banks regulation system.Having benefitted from statistics as well as the computer technology development,the banking supervision research has made the rapid progress,since the 1960s.Using the updating estimate method and measurement model updately,people can expand the range of study and get growing influence achievement.Fistly,this chapter briefly narrates the skeleton supervision theories. According to the time and the research content,this chapter analysis the market failures and regulatory failures from the three aspects,namely risk,the uncertainty and the transaction cost,based on the information economics and regulation economics.The main causes of commercial banks'risks are principal-agent problem, moral hazard and adverse selection.Secondly,it carrys out a brief review of the banks supervision at home and abroad.Next,it presents the latest theory of banking supervision.Finally,it defines the related conceptions and analyzes the general questions to banking supervisory system.â…¡.The Determination of Commercial Banks' Risk Level and the Model Analysis of Supervision CountermeasureBy using model and quantity statistical method,it analyzes and proves various the optimum choices of banking supervisory system arrangements and key variables influencing of system designs in term of validity.The author explains that the risk level that a bank would take is decided jointly by the game between the bank and the depositor,the game between the bank and the borrower,the game between banks,the game between the bank and the government,and the eH'ects of macro-economy. Finally the paper tries to provide an analysis fiamework about optimum banking regulation.â…¢.The Empirical Research on the Macroscopic risk of ChineseCommercial BanksFistly,this chapter discusses the relationship between the asset price bubbles and the risks of commercial banks empirically.It uses the available economic datas from China to discuss about the fluctuation of the real estate price and the stock price with the banking industry risks.The domestic and foreign theorists generally believe that the asset price fluctuations and the bank' risk are mutually promoted by each other so they both mutually depend on each other and rise or the drop spirally.The close relationship between the asset price and the risks of commercial banks lead the result that the burst of the asset price bubble will endanger the banking system's security and causes the bank crisis.However,the empirical results show that there has been obvious relevance beween the bank credit and the real estate price fluctuations,and the relevance with stock price is not obvious.Finally,we discuss the impact of monetary policy on the risks of commercial banks and the cooperation of financial supervision and monetary poliey after we discuss the relationship of the asset price fluctuations and the bank' risk.â…£.The Empirical Research on the Microscopic Risk Risk of Chinese Commercial BanksThe sample we select are the related data China's 13 major commercial banks from 1995 to 2006.Through the empirical study,we found that China's banking is in severe risk and the external cost resulted from the risks is high.We use indicators of average return on assets and loan loss rate to analyze the risk situation of Chinese Banks and based on the empirical evidences we found that the key factors which influence the average return on assets and the loan loss rate of banks are the sufficiency of capital assets,the quality of assets the mobility of assets,the scales of the bank Lending rate and Economic growth rate.The test results indicate that:Fistly the risk level of the state-owned banks is superior to the shareholding banks in the sampling years;Secondly,the policies,including injecting capitals,peeling off the dead assets,restructuring,reducing employment,made by government to save and activate the state-owned banks worked very well in the short term.Since 1998,the general decreasing trend of risk of state-owned banks has weakened the advantage of the shareholding banks;Thirdly,the risk of China's banking is increasing in the sampling years.Although the demand that the development of national economy requires more various financial services are getting higher,the commercial banks, who occupy lots of resources,haven't been able to own profits until now,because of stubborn management system,redundant regulations and government intervene; Fourthly,risk factors affect the profit-making ability of China's banking sectors. China's commercial banking sectors still have less incentive to minimize their risks even though there are abundant potential risks in rapid-developing market.The traditional profit-making approaches always put the assets of China's commercial banks in the higher risks and decrease the credit quality simultaneously.Furthermore, the situation can be qualitatively changed by the restricted market competition and pressure of budget obviously.Fithly,in economic cycles,bank risk has cyclical characteristics.The risk supervision of regulatory authority may lead to more serious cyclicality;and to magnify bank risk.Therefore,the potential risks of lending boom should be paid great attention in economic upswing period.Monetary policy also leads to the risks of bank asymmetrical effects,as monetary policy have different effects during the phases of the economic cycle.Different policy objectives of the central bank and regulatory authority may often give rise to potential policy conflicts in short term,but their objectives are the same in the long-term.â…¤.The Diachronic and Synchronic Analysis of Chinese Commercial Banks' Risks and Risk PreferencesThe chapter analyses China's commercial banks risks and supervision questions in transition period using institutional economics method.We introduce the evolvement and status in quo of Chinese banks' risks,and analyze the subject matters of existence and origin cause of formation in China banking supervision performance.First of all,it analyzes the risks of China banking in the transition period,amply analyzes the structure characteristics of financial market and banking operational efficiency,the inherent relations between banking risks and economic development of socialist market of China,and subject matters and main risks which the banking faces in the transition period.It has summarized the main forms and essential features of banking risks.Secondly,the financial institutions own drawbacks of our country are a profound reason why the financial supervision of our country goes wrong in transition period.The government's too much interference causes financial institution's inside supervision mechanism lag behind and not difficult to realize effective financial supervision.We hold the view that govemment's financial control is the major institutional background and soils for the emergence of the risks of China's banking system.The over-investments of the governments will lead to the hot competition for financial resources and the controlling rights for these financial resources.And this competition will bring about excess money supply and commercial banks risks.Thirdly,the over-investing behaviors of the governments will reduce the macroeconomic stability.The up-and-downs of economic growth will accumulate large numbers of bad debts for banks.It has been proved that there is close relation between bank risk and government investment behavior since China adopted opening up policies.Fourthly,the risk transfermation of the state-owned enterprise reform is the major cause for the fragility of China's banking.The risk causes can be attributed to the worsening of the credit environment and the inherent national credit guarantee system.Finally,soft budget constraintswill result in credit expansion distortion and can also set the bank crisis inmore reliable micro-funounentals.â…¥.Recommendations to Improve the Risks Supervision of Chinese Commercial BanksOn the basis of the previous researches,we put forward some specific proposals to improve the Chinese commercial bank' risk supervision level,namely consolidating a financial regulatory system suited to the needs of integrated operating,improving the risk control mechanism,concretely including the follows:deepening the reform of the shareholding system,establishing a modern commercial bank management system, improving the independence of the board of directors and board of supervisors,and bringing independent directors into full play,increasing the proportion of external supervisors,incarnating the accountability of directors and executives,improving the Board's decision-making mechanism,OIA system and information disclosure mechanism;constructing an effective evaluation system to reflect the banks' risk and profitability,and So on.Enforcement of prudential supervision standards is fundamental to the prevention of financial risks,in order that a safe,stable and sound bank system can be maintained.This iis also a central lesson we should draw from the bank crisis.Furthermore,in view of the economic cycle fluctuation and the asset price fluctuations influence,the commercial banks' supervision should react to asset prices in harmony with monetary policy for the stability of commercial banks.
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