An Research On The Application Of The CARPALS Regulatory System In The Supervision Of China’s Large Commercial Bank’s Branches

Banking regulation and development has been accompanying and conflicting with each other in the history of banking industry in various countries all over the world. Furthermore, spontaneous reform of banks directly promotes the reform of banking regulation. The 2008 global financial crisis began from the U.S. puts forward higher requests for the update of banking regulation. The crisis not only directly leads to the emergence of the Basel Ⅲ, but also promotes the appearance of a batch of new rules of banking regulation. In 2010, China Banking Regulatory Commission(CBRC) explored a whole new banking regulatory system named CARPALS regulatory system under the new situation, which is specially adjusted to the risk characteristics of China’s state-owned large commercial banks.China’s state-owned commercial banks have a large number of branches all over the country. Different levels of regulation branches should also select some indicators and construct regulatory index system applicable to bank branches according to CARPALS regulatory system, so that they can enhance the regulation of bank branches and assist the consistent development of local real economy. The author established a second layer of CARPALS regulatory system in this paper which is adjusted to the regulation of large commercial bank branches, on the basis of deeply studies on the construction of CARPALS regulatory system, practical experience and key points in the regulation of large commercial bank branches. After that, the author tested the effectiveness of the second layer CARPALS regulatory system using data from one branch of large commercial banks. The result of empirical test shows that the second layer CARPALS regulatory system is effective at revealing problems as in daily supervision. The establishment of the second layer CARPALS regulatory system brings higher efficiency to the regulation monitoring on large commercial bank branches. It also makes the regulatory standard unique for different regulatory departments and the regulatory method unique for different level of banking supervisors.Currently the CARPALS regulatory system is mainly used in corporate large commercial bank regulation. Some of the indicators cannot be applied to regulation of bank branches. Besides, there is less academic research on the application of CARPALS regulatory system. The innovation of this paper lies in two aspects. Firstly,a second layer of CARPALS regulatory system is established which is adjusted to regulating of large commercial bank branches. Secondly, this paper produces an empirical research to test and verify the effectiveness of the newly-established second layer of CARPALS regulatory system in the regulation of large commercial bank branches.