An Empirical Study On The Effect Of Capital Adequacy Ratio On Bank Liquidity Creation

The international financial crisis that broke out in 2008 aroused the concerns of the financial supervisory authorities of various countries about the stable and healthy development of the banking industry.After that,the supervisory authorities of various countries began to pay attention to the supervision of the financial system,and the most important measure was to increase the capital adequacy ratio requirements.Raising the capital adequacy ratio requires banks to create more liquidity while ensuring the stable and healthy development of the banking industry,thus hindering the pace of financial services for the real economy.Therefore,this paper studies the impact of a higher capital adequacy ratio on bank liquidity creation,aiming to understand the impact of raising capital adequacy ratio requirements on the ability of banks to serve the real economy,and then propose targeted measures for regulators and banks based on relevant conclusions.This paper firstly combs the domestic and foreign literature,and then determines the research content of this paper on this basis.After that,this paper discusses the relationship between capital adequacy ratio and bank liquidity creation from a theoretical level,the heterogeneous impact of capital regulation on banks’ supply of liquidity to society,and how a higher capital adequacy ratio affects banks’ investment in high-risk projects through The willingness to influence the liquidity delivered by banks to the society is analyzed,and research hypotheses are proposed.Then,this paper selects 165 commercial banks in my country from 2009 to 2020 as research samples,and constructs a multiple linear regression model to explore the impact of higher capital adequacy ratio on banks’ providing liquidity to the society.As a threshold variable,regulatory pressure is tested for threshold effect and mediation effect.Finally,this paper draws the following conclusions:(1)a higher capital adequacy ratio will reduce the liquidity provided by banks to the society,and this conclusion still holds after considering the endogeneity problem;(2)the greater the capital supervision pressure on banks,the negative impact of capital adequacy ratio on bank liquidity creation is greater;(3)For commercial banks of different natures,there is heterogeneity in the impact of capital regulation on their liquidity creation ability;(4)A higher capital adequacy ratio will reduce the liquidity provided by banks to the society by reducing the willingness of banks to make risky investments.