The Optimization And Target Range Of Capital Structure Of Banking Industry In China

The Optimization of the capital structure is vital for the development of China's banking industry. Through the establishment of a reasonable amount and structure of bank capital, commercial banks can meet the regulatory requirements while taking market rules and equity return requirement into account, so as to establish a modern financial enterprise and to develop soundly in the international competition. In this paper, we use the bank capital structure theory as research background, while taking the development objectives, competitive environment and capital structure characteristics of China's commercial banks into consideration, to analyze the capital structure of China's banking industry from two different aspects, the maximization of bank value and risk-taking. We also take the cost control effects of hybrid capital instruments into account. At the end of this thesis, we will see that category supervision could actually optimize capital structure and will figure out reasonable target ranges which is in line with the reality of commercial banks in different categories. The final conclusion includes reasonable target ranges of capital ratio and policy recommendations for the diversity of capital structure.