Impacts On Banks’ Credit Expansion By Capital Regulation

Historical experience tells us what promoted the financial regulatory reform were right the financial crises in history. The subprime mortgage crisis originated in the U.S.in2007has triggered another global thinking about the regulation of commercial banks. Why can’t the Convergence of Capital Measurement and Capital Standards:A Revised Framework "(hereinafter referred to as Basel II) which took as long as six years to draft, consult, and to measure the impacts make banks withstood the crisis?. Learn from their mistakes, the problems exposed by the financial crisis make the international communities generally recognize the need to modify the new Basel Capital Accord, and the need of a comprehensive review of the financial regulatory framework. On September13,2010"Basel III" was born, and was included in the Summit Outcome of leaders meeting of the G-20in SeoulWe china has been always trying to keep up with international standards, and regulate the operation and management of our commercial banks with the "Commercial Bank Capital Management (tentative)" which is even more stringent than the "Basel Ⅲ".2013is the first year of "Basel Ⅲ"’s transition implementation period, analyzing the impacts of the changes of the regulatory requirements on the commercial banks’management is particularly necessary and urgent. The starting point of this study is to analyze the changes of the capital regulatory requirements in latest version of the Basel Ⅲ compared with the agreements before, and to analyze the impact on China’s commercial bank credit expansion. Nowadays the world’s economic situation is uncertain, and Chinese economy is facing huge uncertainties, analyze the regulatory trends is very important to the operation and management of China’s commercial banks. Thus make our banks developed into the international big banks and improve the status of the banking industry of China, in the worldwide financial community, and also conduct the domestic economic environment become clear, and more stable. In this paper, I, Firstly analyzed the evolution of the Basel regulatory agreement, and the financial regulatory trends. Then I analyzed the latest version of the Basel III regulatory requirements which improved compared with the old agreement, focusing on selected changes in the regulatory requirements of capital adequacy ratio to analyze the impact of commercial banks’capability of credit expansion.Many scholars at home or abroad have made the study on the relationship between the capital constraints and the credit expansion, and most of the scholars suggested that capital constraint will produce contractionary effects of credit expansion. There were also scholars found that capital regulation did not have any impact on credit expansion of commercial banks through the empirical study of the early data (1995-2003). Through access to the results of previous studies, I found that the majority of the scholars’study was theoretically descriptive or empirical test study, and there was little study that based on the predictions of the model for the quantitative analysis. Here I used a simplified model which based on the capital adequacy ratio formula to quantitatively predict the impacts of the changes in the regulatory requirements on the commercial banks’credit expansion, and also suggested the way to improve the capital adequacy ratio, and to lower capital regulation’s impacts on credit expansionIn my view, asset securitization can effectively reduce the effect of capital constraints, and to ensure the robust growth of credit assets in the premise of risk control.