The Research On The Market Discipline Of Subordinated Bonds Issued By Commercial Bank In China

Market discipline is one of the three pillars of banking supervision in New Basel Capital Accord, The essence is that bank of stakeholders get help from disclosure and market power of intermediaries to assess the risks and constraints held by the bank level.its role in banking supervision has been certained by the Basel Committee. This article Choose the secondary bond as study Object, Because the secondary bond is the financial instruments that reflect Market discipline best. Meanwhile, contact the Chinese reality, the article Chinese secondary bond data Test and verify the existence and effect of market discipline, reflects a combination of theory and practice.Subordinated bonds are special varieties of bonds, which after the depositors and ordinary bonds, before the stock in the pay off order, and it has a strong market constraint function in theory; the ultimate goal of market discipline is to constraint the level of banks'risk taking, include market monitoring stage and market influencing stage. the empirical results of secondary bonds'market discipline show that: the role of secondary bonds'market discipline is exist, but not obvious. The reason is that the bond's credit rating is not accurate, the government's implicit guarantee seriously, and the illiquidity of bonds. This affects the role of secondary bonds'market discipline effectively. Finally, based on the empirical analysis, the paper put forward specific proposals to strengthen the market discipline of the chinese secondary bonds, make subordinated bonds play a complementary function of capital, in the same time, give full play to the role of market discipline on banks.