Research On The Influence Of Capital Regulation On Credit Of Commercial Banks

The outbreak of the global financial crisis in 2008 triggered a comprehensive review on banking regulation.The international organization represented by the BIS has reached a consensus on restructuring the international financial regulatory framework.At present,some regulatory policy reform responses have been formed,among which Basel III(International framework for liquidity risk measurement,standards and monitoring)as an important achievement of the reform has established a new benchmark for global banking supervision.The Chinese supervisory authority also promulgated The Capital Rules for Commercial Banks(Provisional)on the basis of the Basel III framework in 2012.If marked from the establishment of the concept framework of capital adequacy ratio in The Law of the People's Republic of China on Commercial Banks in 1995,China's capital ratio has been regulated for more than 20 years,and if it is marked by The Measures for The Management of Capital Adequacy Ratios of Commercial Banks issued in 2004,China's capital regulation system has also been implemented for nearly 15 years.Capital supervision tools and systems have experienced a leap-forward development from loose to strict.A strong and resilient banking system is the foundation for sustainable economic growth,as banks are at the centre of the credit intermediation process.That is,quantifying the effect of bank capital on bank credit supply is one of the most fundamental research problems requiring resolution in verifying the link between the financial sector and real activity,especially,in a country like China where bank indirect financing dominates.Moreover,bank credit is one of the important means to optimize the allocation of social resources.It plays an indispensable and positive role in promoting economic restructuring and industrial restructuring and upgrading.Therefore,how is the gradual and strict capital supervision affecting the credit supply behavior of banks,especially the structure of credit holding departments(how do personal loans and corporate loans are allocated),and what heterogeneity arises from regulatory pressure constraints and strengthened minimum capital requirements on different loans? The questions are all the core issue of this study.The research objectives are mainly to examine the sensitivity differences between the total credit scale,corporate loans and personal loans of commercial banks in China to regulatory policies,and to verify the effectiveness of regulatory policies and systems.Based on the research objectives,this paper first defines the two core concepts of capital supervision and bank credit,defines the scope of the study.On this basis,combs the theoretical basis of bank capital supervision and credit supply,and analyzes its theoretical reference significance for this study.Secondly,it analyzes the path of asset portfolio adjustment of commercial banks under capital regulation,and analyzes the mechanism of capital regulation affecting credit supply and credit holding sector structure of commercial banks from the perspective of asset portfolio adjustment.Thirdly,this paper reviews the capital supervision practice in China,which is based on the Basel Accord rules and the actual situation in China,and analyses the characteristics of capital adequacy,credit scale,structure and quality in different periods of capital regulation.Finally,using the data of 112 commercial banks in China from 2004 to 2016 as a sample,we empirically examine the effect of capital supervision on the total credit growth of commercial banks,the growth of personal loans,and the growth rate of corporate loans.The empirical results show that:(1)Regulatory pressures on capital regulation will restrict the risk-taking behaviors of capital shortage and capital constrained commercial bank's credit expansion.Compared with capital adequacy banks,these two types of banks have insufficient absorptive capacity for capital loss,and the incentive to restrain their credit risk will contribute to the soundness of the banking system.The Capital Rules for Commercial Banks(Provisional),which was implemented in 2013,has produced a marginal inhibitory effect on the credit supply than a substantial credit crunch of commercial banks in China.The capital adequacy ratio and credit expansion of commercial banks have a positive correlation,which also shows that banks with poor capital status tend to show a credit crunch phenomenon.(2)China's current regulatory system can effectively guide the bank's credit asset allocation behavior.Regulatory pressures will prompt banks to adjust the credit structure.Capital shortages and capital constrained commercial banks will be less equipped with corporate loans.Under fierce market competition,commercial banks still need to seek profitable growth points through the expansion of assets in order to survive and develop.Therefore,the personal loan with low consumption capital will keep increasing while facing the pressure of regulation,and the whole effect is the adjustment and optimization of the bank credit risk structure.The enhanced capital requirements of The Capital Rules for Commercial Banks(Provisional)have played a certain role in inhibiting the growth of corporate loans,but the effect of suppressing personal loans is not obvious.Besides,compared with corporate loans,personal loans have the attributes of low consumption capital and low risk of default,and they are more sensitive to capital.Based on the empirical conclusion of this paper,combined with the current situation of capital management and credit asset management in China's commercial banks,this paper puts forward the following countermeasures:(1)Improve the efficiency of bank capital regulation,strengthen the guiding role of regulatory policy;(2)Optimize the risk weights of different assets to create a differentiated regulatory environment;(3)Explore multiple channels to replenish capital and improve the efficiency of bank capital utilization;(4)Strengthen the capital constraint management concept,improve the ability of comprehensive risk management;(5)Optimize the allocation of bank credit resources,and constantly improve the bank service capacity.