A Research On The Capital Adequacy Management Of The Commercial Banks In China

Capital is the basic investment funds that investors hold to meet the needs of capital and assumedebt obligations, it is the risk capital held by commercial banks or financial supervisory departmentsrequire to take risks, absorb operating losses and protect the interests of depositors. Sufficient capital canguarantee the normal operation of commercial banks and offset the losses, reduce the risk when the banksface a sudden accident.Usually, the capital adequacy ratio is used to measure the capital adequacy, it is acore index of whether the commercial banks can keep the normal operation and deal with the risk of strikes.Commercial banks maintain adequate capital levels are the basic conditions for survival and development.Since the door of China’s banking industry opends,the pace of reform of China’s commercialbanks never stop. The supervision of commercial banks held by the state administrative intervention hasbeen insteaded of the regulatory framework which contains the capital adequacy ratio supervision as thecore step-by-step. In the early Basel agreement of1988’s, the international banking regulators put thesupervision of capital adequacy ratio on the core position of banking supervision.Obviously, whether thecapital is adequate and the supervision of capital adequacy ratio is strict has a deep effect on the healthydevelopment of a country even a whole global banking industry.The outbreak of international financial crisis in2008results in the global economy’s recession oreven paralysis. In this special economic period,people of all countries fell into economic depression, theinternational banking industry had to conduct a comprehensive reflection of the management mode ofcommercial banks. Therefore,this event as the background,in September2010, the Central Bank of maincountries in the world reached an agreement on the global banking regulatory rules in Basel,“Basel Ⅲ” was born.The new banking supervision standard takes the excellent concept of previous agreement, afterlasting the three pillares of banking supervision:minimum capital requirements, supervision of theregulatory authorities and market discipline,pays more attention to the capital adequacy and risksupervision of commercial banks, aiming to handle risk events with enough capital in commercial banks, atthe same time, it can reduce its losses. In view of the various wave performance of international financialcrisis in banking,in the background of new global banking supervision,commercial banks will activelyexplore how to build a more perfect and effective regulatory framework, and how to set up a long-termmechanism for commercial bank supplementary capital, so as to improve their management level and theability to resist risks. It can be seen, the supervision of commercial bank’s capital adequacy ratio still liesthe core position. It might be an oncoming train for commercial banks to promote the ability of capitalsupplement through various channels according to the conditions of commercial banks themselves.In this paper, in the background of international financial crisis’s outbreak, the concept and effectof capital and capital adequacy ratio is leaded in the front of paper, after the theoretical analysis of thecapital adequacy management, the paper points out the gist of the important meaning for the developmentof commercial banks. As the main line of the introduction of international banking supervision “Basel Ⅲ”throughout the text, followed by analysis of the old and the new capital Accord’s differences, the paperstates the main contents and new requirements of capital adequacy ratio in “Basel Ⅲ”. Combining with theactual situation of China’s banking industry and the analysis of data, in the trend of “Basel Ⅲ”, the paperdescribs the framework of capital management for commercial banks and its impact on capital adequacymanagement of China commercial banks. Then, based on the commercial banks’capital supplementary, thepaper explains capital supplement mechanism of commercial banks from the effect of molecular and denominator. Meanwhile, combining the actual conditions of domestic banking industry, it explores thepossible ways that capital supplementary of commercial banks. Finally, through the theoretical in front ofall, it discusses how to establish and improve the long-term mechanism of capital of commercial banksunder the “Basel Ⅲ” and on the premise of looking forward to the new standards of international bankingsupervision in many aspects and channels in China.In the conclusion part, the paper expresses the suggestions and strategies of making up the lack ofcapital and improving the capital adequacy ratio, and finally, it leads to build a long-term capital savingbank road that contains capital supplement mechanism, fits with China’s national conditions andinternational regulatory standards.In summary, this paper makes a full analysis of the capital management mechanism and itssupplementary channel in the banking of China,on this basis, it has carried on the beneficial exploration tothe capital adequacy management in the banking of China.