The Relationship Between Capital Regulation And Risk Taking In Banking

The text studies the relationship between bank capital regulation and bank risk-taking,and proposes the paradigm of bank's capital,to the bank asset allocation,to the paradigm of risk-taking banks to analyze the relationship between bank's capital regulation and bank risk-taking on the basis of analysis the theory of bank capital regulation and bank risk-taking.The paper transforms bank regulatory capital and bank risk-taking into the internal configuration of assets,by which the risk-taking is reflected.The bank risk-taking is reflected by the proportion of risk assets in the bank asset allocation.On the basis of that,paper establishes the model of ratio of bank capital and risk assets,under the requirements of building the regulatory in the bank's capital. Through the model talked above,the paper analyzes the bank capital regulation and risk-taking.The process of formation of model supposes that bank risk assets include loss assets and non-loss assets at the end of term at certain ratio.This assumption is according with the requirement of that CreditRisk+ model computes distribution of the assets of breach of contract.So the paper chooses CreditRisk+ model to describe the distribution of default losses of bank risk assets in model.Through the analysis of model,I discover that the bank carries on the most risk under the circumstances of certain bank capital regulation and a serious shortage of bank capital,while bank risk increases after short decrease with the gradual increase of bank capital.Comparing the results with equation simulation analysis of the data in China's commercial banks from 2002 to 2008,the model in paper is in line with the result of equation simulation analysis under the circumstances of shortage of bank capital adequacy ratio.That is the bank has the tendency to increase risk-taking.In the end,the model in paper is been extended,incorporating the bank's own objective capital requirements and venture capital of bank into the model,in order to be closer to the actual.