China's Listed Banks' Capital Adequacy Regulation Effect

Capital regulatory, especially the capital adequacy ratio regulation has been highlyrecognized in the field of international financial regulation. Since a very long time ago,the capital adequacy ratio regulation has been a hot topic in the field of internationalbanks. The outbreak of the global financial crisis in2008and the bankruptcy of manyfamous foreign financial institutions have made capital adequacy ratio regulation onceagain become the focus of attention. China’s banking industry could be able tocircumvent in the crisis, one important cause is the excessive regulation and the financialfield is not completely open. Therefore, after the crisis, to explore the relationshipbetween the bank’s capital adequacy ratio regulation and the profitability of banks hasgreat theoretical and practical significance and economic value for China’s bankingsector in the environment of emerging markets and transition economies.This paper first reviews the domestic and foreign literature about the influence ofcapital adequacy ratio regulatory to banks profitability. we found that the domestic andinternational academic community has not reached a common consensus on this issue.Then this paper reviews the theory about the regulation of the capital adequacy ratio andthe analysis of the implementation of the capital adequacy ratio regulation in the UnitedStates and Japan. Then this paper introduces the present situation of China’s capitaladequacy ratio regulation, and as well as the changes in banks’ outstanding achievementbefore and after the implementation of the capital adequacy ratio regulation. And then thepaper build models to analysis the relationship between the capital adequacy regulationand the banks’ performance, with the decades from2001to2010of11typical joint-stockbanks as a sample. The model proves that capital adequacy ratio regulatory to banks ispositive to banks’ operating results, so this paper then puts forward relevant policyrecommendations.