Analysis Of Leverage Ratio And Its Influencing Factors Of Commercial Banks In China

In 2008,the outbreak of the financial crisis,the global economy was in a downturn.In this crisis,people realized the fragility and complexity of the financial system,and the direction of financial supervision began to change.Countries did not blindly encourage financial innovation,but began to pay attention to macro-prudential supervision.Basel III was introduced in 2010.In the construction of its three pillars,leverage regulation was proposed.Before that,capital adequacy ratio was the main way for countries to manage capital and prevent risks.The key difference between the two is the denominator.Capital adequacy ratio is the value of assets tested by risk model,while leverage ratio is the value of assets not tested by risk model.In such an international context,China Banking Regulatory Commission began to re-emphasize the management of leverage ratio.In 2010,China Banking Regulatory Commission(CBRC)introduced leverage regulation measures.Commercial banks increase leverage and deleverage before and after economic fluctuations,so as to expand economic fluctuations.As an important participant in the financial system,commercial banks have the inherent characteristics of leveraging when they expand their balance sheet and off-balance-sheet business under certain conditions of their own capital,transferring funds from the surplus to the vacant for profit.But leveraging at all levels has also exacerbated regulatorychallenges,such as the development of peer businesses in recent years.Moreover,the idling of funds by commercial banks in the financial field not only increases the leverage of themselves and non-bank financial institutions,but also results in the excessive price of funds flowing into the real economy,which hinders the development of real economy.Therefore,the unreasonable leverage level of commercial banks is contrary to the concept of sound development of the real economy of financial services.At present,the leverage ratio of commercial banks in China meets the requirements of Basel III and CBRC,but they also face the situation of deleveraging.China’s leverage regulation has existed since the founding of the People’s Republic of China,but it has not been paid attention to in the planned economy period.In the period of mixed financial development,only capital adequacy ratio is taken as an important indicator,and effective leverage regulation has not been implemented.In 2010,China formally introduced the relevant provisions on leverage regulation,and the leverage regulation of commercial banks was on the right track.The market is the main body,domestic and foreign financial institutions compete equally,and commercial banks are facing increasing challenges.For example,the marketization of interest rates has impacted the traditional deposit-loan balance business of commercial banks,and the rise of other non-bank financial institutions has robbed some of the business of commercial banks,so the transformation of commercial banks is imminent.In 2018,major commercial banks have introduced scientific and technological financial talents and implemented financial innovation.In this process,there will inevitably be leveraging behavior.At present,the leverage ratio of commercial banks in China is generally higher than 4%,but the leverage ratio of commercial banks of different qualities is obviously different.In terms of speed,the leverage ratio of some commercial banks increases too slowly.Therefore,it is necessary to study the current situation of leverage ratio of commercial banks in China and explore the influencing factors of leverage ratio in order to implement more effective leverage regulation.In view of this,this paper carries out an analysis of the factors affecting the leverage ratio of commercial banks in China.This paper conducts an empirical study on 16 listed commercial banks from 2004 to 2017.The purpose of this study is to understand the influencing factors of the leverage ratio of commercial banks in China,and put forward some reasonable suggestions for the deleveraging of commercial banks in China.China’s commercial banks will face greater challenges in the future.How to base on and develop in the complex financial environment is a problem for all commercial banks to think about.This paper gives some inspiration to commercial banks from the aspect of leverage.