A Study On The Impact Of China 's Banking Supervision On Bank Efficiency

The purpose of this paper is to explore the changes of capital regulation and regulatory independence on the efficiency of commercial banks. In order to measure the impact of capital regulation and supervision independence on the efficiency of commercial banks as accurate as possible, based on the literature we selected the economic growth, bank size, market concentration, as control variables. In order to eliminate the presence of endogeneity, the paper adopted a fixed effect model to overcome the effects of endogenous and regions exist in the model, and introduce the time dummies to control the correlation between the variables in the model. In addition, we use a different measurement methods in the research process, chose a different sample period and variable robustness tests.The main conclusions of this article are as follows: in the respect of efficiency of commercial banks, the cost efficiency and technical efficiency of the banking sector are generally higher. Secondly, whether it is cost‐effective or technical efficiency, joint‐stock commercial banks are higher than those of state‐owned commercial banks, but the gap between the two is not great. Finally, the cost efficiency and technical efficiency of the banking sector development are relatively stable, which is difficult to improve sharply in the short term. From the impact of banks’ supervision on bank efficiency, the capital adequacy on commercial banks and regulators independent has a very significant positive correlation effects. This shows that when banking regulators to strengthen supervision of commercial banks at the same time meet the regulatory requirements and the efficiency of banks has also been significantly improved; and more independent banking supervision, namely dummies Bank non‐governmental officials, due to the presence of the Board of Directors’ positive incentives, the technical efficiency has improved. Secondly, with the increase of the size of bank assets, the bank is usually accompanied with a higher level of business diversification, after taking into account the size of banks, the impact of capital regulation is still significant, while regulatory independence is relatively weak. Finally, we take market concentration, economic growth and loan loss provisions into account, the capital regulation and market concentration are still remarkably effective, but bank assets slightly weaker, regulatory independence is relatively weak.Based on the empirical tests and conclusions, the paper gives some suggestions: firstly, we should deepen the bank’s internal reform by adjusting the structure of property rights to improve the efficiency of commercial banks and corporate governance. Secondly, we needs to continue to expand the scope of financial markets, improve banking market structure, moderately reduce the access threshold for the banking sector, and thus improve the development of the modern financial system. Thirdly, Regulators should enhance the professional supervision by a variety of ways strengthen the capital regulation accounting method, increase the evaluation of independent risk assessment of each agency, appropriate adjust the budget allocation of regulatory agencies in order to ensure the independence of regulatory bodies.