Research On The Impact Of Commercial Bank Liquidity Creation On Capital Buffer

How to effectively prevent and control financial systemic risks has always been a matter of concern.In China’s financial system,the banking sector plays a leading role in indirect financing,which makes most of the risks in China’s financial system concentrated within the banking system.In order to prevent systemic financial risks in the banking industry,effective macro-prudential tools are of paramount importance.The establishment of the Basel Committee on Banking Supervision and the continuous updating of the Basel Accord also reflect the constant reflection of the world’s scholars on the economic crisis.In the new Basel Accord,the regulatory system of counter-cyclical capital buffer has become one of the important tools for the supervision of capital in the banking industry.The establishment of a sound macro-prudential tool for applying China’s national conditions has become the main goal In the study of whether the counter-cyclical capital supervision mechanism is applicable to China’s national conditions,the impact of liquidity on capital buffering is still a blank in academic research.This paper first introduces the panel model of capital buffer,empirically analyzes the data of 23 commercial banks in China during the decade of 2008-2017.The results show that the liquidity creation of commercial banks in China can affect the level of capital buffer and the creation of liquidity will restrain the capital buffer.Further,this paper divides the sample into two categories according to the nature of China’s banks:state-owned and joint-stock commercial banks,city commercial banks,and studied the heterogeneity of different types of banks.It then verifies the impact of the bank’s market structure on the relationship between liquidity creation and capital buffering.Finally,the conclusions and policy recommendations of this paper are presented.