Commercial Bank Of Regulatory Arbitrage Empirical Research

Commercial bank regulatory arbitrage to circumvent the regulatory oversight and regulatory arbitrage is primarily by means of shadow banking activities as the carrier, with financial innovation products as "appearance", which will transfer some risk assets out of the balance sheet to reduce the demand for venture capital and increase its leverage in order to get higher profit. In 2008, Lehman,Merrill Lynch, Bear Stearns and other large investment Banks went bankrupt. It caused the global financial crisis, which highlighted the systemic risk implied by the commercial bank regulatory arbitrage and the shadow banking system. The operation of the shadow banking system and its formation mechanism and risk transmission mechanism become a concern of the researchers.Due to differences among the maturity of financial market and regulation system, the realization of different commercial Banks to regulatory arbitrage and forms of shadow banking are also different. In the USA, the commercial banks regard the securitization as the most important way to regulatory arbitrage. However, securitization in our country is still in its infancy and the structure of the shadow banking system in China is different from the United States. So our country’s commercial banks how to regulatory arbitrage is the focus of this article. This paper tries to from the assets structure of commercial Banks change angle to analyze the motivation of our country commercial bank regulatory arbitrage, and arbitrage effects of commercial bank assets structure and performance.Based on a large number of domestic and foreign scholars of literature, this paper presents the real appearance of the current domestic bank’s development by the motivation and realization ways of commercial bank regulatory arbitrage. What’s more, this paper also introduces in detail the concept of Chinese shadow banking system, operation mechanism, development scale and so on.Firstly, through studying the principle of commercial bank regulatory arbitrage, this paper analyzes the relationship between the assets and the core capital adequacy ratio. So the author puts forward a theoretical hypothesis: the core capital adequacy ratio has some negative effects to buying back the sale of financial assets and loans and advances. Secondly, this article with the aid of flush financial database to collect the quarterly balance sheets of 16 listed commercial bank in China from 2002 to2014, choose the ratio of buying back the sale of financial assets and loans and advances to totalassets as the explained variables, and before a period of core capital adequacy ratio as explanatory variable, using stata12.0 software to correlation analysis and regression analysis. From the empirical results, the commercial bank’s core capital adequacy ratio for the the ratio of buying back the sale of financial assets and loans and advances to total assets have a significant impact, both showed a negative correlation relationship, which conform to the theoretical hypothesis proposed in this paper.Thirdly, with empirical research about the the relationship between asset structure and bank performance change, buying back the sale of financial assets and loans and advances which are directly influenced by commercial bank regulatory arbitrage to spott return on total assets have a significant impact and show as a negative correlation relationship. In terms of the relationship to a period after the return on total assets, buying back the sale of financial assets to it is not significant,but loans and advances to it still has significant positive influence. Finally, drawing lessons from the United States and other developed countries in the world of shadow banking regulatory experience,combined with the actual situation of our country, this paper puts forward some relevant policy Suggestions.In addition, most of the research results of scholars are study from the sight of the perspective of liquidity and other macroeconomic analysis, and many empirical studies of shadow banking are based on estimates its development scale, development causes, risk monitoring, this paper tries to further explain by quantitative analysis the influence of the shadow banking to the financial indicators in traditional bank’s balance sheets, which can make up for the current scholars study about the fields. But this paper collected sample data is non-equilibrium and sample size is not large,combined with the author is lack of correlative experience, some other influence variables not considered, lead to the final results of quantitative analysis has some deviation, so It remains to be further in the future research.