| Adequate capital is the base of commercial banks to prevent all kinds of risk and maintain the confidence of public. Whether the capital is adequate enough or not is weighed by Capital Adequacy Ratio (CAR), that is, the ratio of Regularity Capital and Risk Weighed Assets. China has taken a moderately loose monetary policy after the financial crisis in 2008, which caused large amount of credit that brought great risk to commercial banking, thus, China Banking Regulatory Commission (CBRC) has raised the CAR to 10% and 11%, on the other hand, BaselⅢissued in September of 2010 renewed the standard of CAR, and which requested that commercial banks should attach more importance to risk management and increase its CAR to keep away systematic risk. Against this background, the CAR of commercial banks in China deserves more attention and study. The paper consists of four chapters.The first chapter expatiates on the idea of selecting topic and study background, and reviews the relevant references about CAR management of commercial banks of domestic and foreign scholars, and then points out the innovation and deficiencies.The second chapter introduces the relevant concepts and theories of capital as well as CAR. This chapter firstly analyzes the function of bank capital, which also classifies the bank capital, and points out that the capital in the paper means Regularity Capital. Secondly, the concept and computational method of CAR are introduced. Thirdly, capital supplement and capital constraint are stated. This chapter is the theoretic basis of the following research.The third chapter analyzes and studies the status quo and problems as well as its reasons in CAR management of commercial banks in China, using theoretical research and quantitative terms, comparative and analytical method, lateral and vertical contrast, and explains the status quo of CAR visually with numerous tables and pictures. At present, the CAR of commercial banks in China represents three aspects. Firstly, commercial banks, whose CAR reached to the standard has been increased yearly with the enhanced supervision of CBRC, however, the level of CAR has shown downward trend in recently years, and take 14 commercial banks listed in A share market for example, whose CAR on average appeared a significant decline since 2007; Part of the commercial banks retained a low level of CAR under the raised standard by CBRC. Secondly, in commercial banking system of China, the CAR of 5 major commercial banks on average, which is close to China Development Bank switched, is higher than 12 shareholding commercial banks, and is lower than 143 city commercial banks. The CAR of city commercial banks is uneven, some high and some rather low; compared with the international advanced commercial banks, CAR of commercial banks in China is still in the low status. Thirdly, among the capital structure of commercial banks in China, common stock equity holds a quite high proportion, which would put itself at a disadvantage and affect its development meanwhile under the unified regulatory standards, although, can resist risk successfully. The factors which caused CAR of commercial banks to such a situation are: the rapid growth of risked assets, limited ability to profit of small-medium banks, shortage of internal accumulation, and imperfection of capital structure.The fourth chapter basing the various factors that affect the CAR of commercial banks brings forward measures to improve the management of CAR presently according to status quo of commercial banks in China. Such as enhance internal accumulation; limit the rapid growth of risked assets; quicken the business transformation. These measures might be of important value in improving the CAR management and its level of commercial banks in China.After the study,we find that in order to perfect the mechanism of enhancing CAR of commercial banks in China and seek its sustainable development, commercial banks should change the traditional mode of operation and profit, and quicken business transformation with the improvement of profitability and internal accumulation; at the same time, limit the rapid growth of risked assets; perfect the capital market continually and look after multi-channel capital-raising mechanism; grasp the change of environment of international and domestic economy and finance and build a overall risk management system. In a word, commercial banks in China should improve the management of CAR and choose the mode of sustainable development according their condition and the trend of future development, to try their best to become top international banks. |
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