The Influence Of Leverage Ratio On The Profitability Of China's Listed Commercial Banks

The world financial crisis in 2008 brought great impact to the financial system and the real economy of the world,resulting in the collapse of a large number of financial institutions and the sharp fall in the price of financial assets.In the cause of the global financial crisis,is a very important part of the commercial banks in developed countries in order to meet the conditions of capital adequacy supervision,will be in the form of assets by asset securitization and other means,it will cause the shortage of capital which leads to a substantial increase in the degree of leverage,thereby reducing the ability of financial mechanism to resist risks.This causes all countries to think and explore the supervision of financial institutions in the world."Basel Agreement III" came into being at this time.Basel Agreement III has launched the supervision of leverage ratio,and high leverage is the way many financial institutions take to increase profits.Therefore,under the increasingly strict supervision of leverage,the profitability of commercial banks is also facing a huge test.In this context,this paper focuses on the relationship between leverage ratio regulation and profitability of commercial banks.First,it summarizes the changes of commercial bank regulation and the influencing factors of profitability of commercial banks.Then we analyze the leverage ratio and profitability of 14 listed commercial banks in China before and after the implementation of leverage ratio regulation.It is found that leverage regulation has a significant impact on China's commercial banks' leverage ratio and profitability.On this basis,this paper uses the panel data of the regression analysis,the empirical results show that leverage increases the profitability of commercial banks,the inverse relationship between the two;at the same time,the implementation of leverage regulation policy,strengthen the inverse relationship between the two,the supervision of policy implementation,the leverage level decreased ability to increase the profitability of banks improved.This means that under the existing leverage supervision framework,banks will achieve the established profit goal through excessive risk taking business operations,which will increase the systemic risk of the banking system.Finally,in order to realize the coordination between bank risk and bank income,This paper puts forward feasible suggestions for regulatory authorities and commercial banks to allow commercial banks to issuepreferred shares to expand capital supplement channels,and commercial banks to increase financial innovation.