Research On The Effectiveness Of Capital Adequacy Regulation Of Commercial Banks In China

The global financial crisis of 2008 has been made all parties question the concept of capital adequacy supervision, which has been insisted on by "Basel II". In this case, the introduction of "Basel III" set new standards and rules for capital regulation of the banking industry in the world. In order to keep up with the pace of the development of international banking capital supervision, China Banking Regulatory Commission published "The Capital management of commercial banks(for Trial Implementation)" in June 2012. The regulatory approach fully introduces the latest requirements of international capital regulation. It will restrict the extensive expansion and urge the business transformation of China’s commercial banks. Chinese banking industry may face a series of challenges, such as the scale of growth slows, the difficulty of capital supplement and so on, China Banking Regulatory Commission will also face many difficulties and problems in the supervision of commercial banks. Therefore, whether the capital adequacy regulation of commercial banks in our country is effective or not, becomes a problem worthy of study.This paper firstly summarizes and sorts out the domestic and foreign literature which study on the effectiveness of commercial bank capital adequacy regulation. Second, it clarifies the connotation of commercial bank capital adequacy, capital adequacy regulation and the effectiveness of capital adequacy regulation. And then, this paper reviews the development course of the capital adequacy regulation of China’s commercial banks, evaluates the effectiveness of the capital adequacy regulation of China’s commercial banks through the analysis of the capital adequacy ratio and the overall level of risk, pointed out the problems of China’s commercial banks capital adequacy regulation. Based on the data of 20 representative commercial banks in China from 2007 to 2014 and the model of foreign scholars’ research, this paper makes use of two-stage least squares method to carry on the positive research. The results of the study are in agreement with the aforementioned evaluation.That is, the capital adequacy regulation of commercial banks in our country has a little effect, but the effect is not significant. Finally, according to the research conclusion, it put forward policy recommendations, targeted to improve the effectiveness of China’s commercial bank capital adequacy regulation.