Research On Financing Of Preferred Stocks Of Listed Commercial Banks In China

Preferred stock is a kind of stock that is different from ordinary stocks.It both has the characteristics of the stocks and the bonds.It is usually considered as a hybrid financial instrument.The preferred stock financing developed so much in the capital markets of European and American countries,which has been widely recognized and applied by republic.With the adoption of the Basel III by the Basel Banking Supervision Committee in 2010,international and domestic regulatory requirements for the higher capital adequacy ratios of listed commercial banks in China.Listed commercial banks are generally facing capital shortages and financing difficulties,financial instruments such as preferred stocks and perpetual bonds are urgently needed to supplement other Tier one capital adequacy ratios.Between 2013 and 2014,the CSRC and introduced documents such as "Preferential Stock Pilot Management Measures","Public Company Issuance of Preferred Stock Information Disclosure Guidelines","Guidance Opinions on Listed Banks Issuing Preferred Stock",The preference stock showed in our country.Since then,China's listed commercial banks have begun to issue preferred stocks for financing to supplement their short-term capital.The paper selects 17 listed commercial banks that issue preferredstock financing from 2014 to 2017 as the cases.First,it introduces the overview of listed commercial bank that preferred stock financing,and analyzes the similarities and differences of 17 listed commercial banks that issue preferred stock.After that,the paper analyzes the effect of financing preferred stocks of listed commercial banks,and studies the change of capital adequacy ratio,tier one capital adequacy ratio,capital liability ratio,and ROE of listed commercial banks before and after issuing preferred stock financing.The paper also designed a empirically study,explore the market effect of preferred stock financing on banks by observing the changes in stock prices before and after the bank issues preferred stock financing.After research,it is found that the financing of preferred stocks can indeed supplement the capital adequacy ratio and tier one capital adequacy ratio of listed commercial banks and reduce the asset-liability ratio,but to a certain extent,it will negatively affect the profitability of listed commercial banks.It is also considered that negative effects are within acceptable limits.The paper concludes that preferred stock financing can indeed supplement the capital of listed commercial banks,enhance their ability on withstanding risks,bring positive market effects to the banks,and then draw few relevant recommendations:(1)Listed commercial banks should set reasonable dividends(2)Commercial banks could carry out more financial innovations and introduce more financial instruments such asperpetual bonds;(3)Commercial banks can decide whether to apply preferred stock financing based on their own circumstances;(4)China's regulatory agencies should relax the issuance conditions and strict supervision of companies that had issued preference stock.It is hoped that these suggestions can be used as a reference for listed commercial banks and other companies to issue preferred stock financing,so that preferred stocks can develop better in China's capital market.