The Analysis On The Credit Behavior Of Banks Under Capital Regulation Pressure

In recent, Credit risk preferences and behavior of commercial banks under capitalregulation not only related to the development of the banking sector itself, but also tothe creditors. Further, it is a premise of economic stability and development in acountry. In China bank credit is the main means of financing, so security and stabilityin bank credit is more important, specifically, in its term of economic transition. Withthe outbreak of the financial crisis frequent, destructive and wide, the regulatoryrequirements of commercial banks continued to deepen. In the increasingly stringentregulatory capital requirements, banks’ microscopic behavior of credit becomes thefocus of the study.In accordance with double standard-the capital adequacy ratio of "quality" and"quantity", this article puts China’s commercial banks into three types: more-selectivecapital quality banks, whose capital sources are rich and almost under no regulatorypressure; flexible capital qualities banks, who have adequate capital resources and theywere under capital regulatory pressure occasionally, but they can finance quickly; rigidcapital qualities banks, who have limited capital resources and were under capitalregulation pressures all the time. First, the article build a theoretical framework toanalysis the relationship between capital adequacy ratio and risk of credit from theperspective of capital heterogeneity, then used actual data of39commercial banks andunbalanced panel data model to do empirical research. The results show that theheterogeneity of capital regulation on bank credit had different effects: tomore-selective capital quality banks, the credit of the industry selection and capitaladequacy ratio had no significant relation, but with the increasing in capital they wouldincrease high-risk industries loans and long-term loans, as well as short-term loans;while in the capital constraint, flexible capital qualities banks tend to expand high-riskindustries credit, reduce some of the low-risk industries credit, while increasing eachterm credit; rigid capital qualities banks were prone to tightening credit of variousindustries, reducing the long-term credit, increasing in short-term credit to increase thecapital adequacy ratio. In addition, the article also from the perspective of regulatorycapital and the heterogeneity of the banks to interpret the current Chinese bankingmaturity mismatches of deposit and lending. Finally, the article provides policyrecommendations on three levels to optimization of capital regulation.