A Research On Capital Adequacy Ratio Management Of Rural Cooperative Financial Institutions Under New Capital Accord

The Financial crisis exposed the defect of the Risk Management of Commercial Bank. In order to enhance capital management and prevent financial risks from threatening social stability, the Basel Committee and the China Banking Regulatory Commission has issued more rigorous capital regulations. The new released policy is a big challenge to capital management of commercial banks, especially for the not well developed rural cooperative financial institutions facing enormous regulatory pressure from economic downturn facing. Hence, it is vital important for the rural cooperative financial institutions to study capital management.In this article, we combine the theory and case analysis. We start with the evolution of Basel Capital Accord, combing the status of rural cooperative financial institutions in A City. By using lots of diagrams and data, we analyze the influence of new Basel Capital Accord on the capital adequacy ratio of rural cooperative financial institutions in A City, and we find out the factor that restricts the raise of capital adequacy ratio of A City. Moreover, we present new proposal, which is adapted to the rural cooperative financial institutions, to raise capital adequacy ratio.This paper is divided into six parts. The first part is the introduction, which describes the research status of capital management. In the second part, we analyze the evolution and the main content of Basel Capital Accord, and we analyze the influence of the new capital accord on the rural cooperative financial institutions by comparing the new capital accord with the old one.In the third part, we introduce the development of rural cooperative financial institutions in A city, and we focus on analyzing the fluctuation of capital adequacy ratio of A City in these three years, which gives the starting point for analyzing the restriction to the raise of capital adequacy ratio. In the fourth part, taking the rural cooperative financial institutions in A city as an example, by analyzing large amounts of data and diagrams, we point out the current restrictions to the raise of capital adequacy ratio of rural cooperative financial institutions and it includes the difficulty of exogenous capital replenishment, the lack of endogenous capital supplement, poor asset quality and unreasonable asset structure. In the fifth part, according to the constraints of the capital adequacy ratio of rural cooperative financial, from the aspect of increasing in net capital as well as from the aspect of reducing risk-weighted assets, we propose to introduce strategic investors, improve profitability, reduce non-performing loans and adjust the asset structure etc, in order to improve the capital adequacy ratio. The sixth part is the Subjects, we briefly summarize the full text.