Research On The Impact Of Regulatory Penalty On Bank Systemic Risk

Since the financial crisis in 2008,the issue of financial supervision has received extensive attention from various countries.As the main body of the financial market,the healthy development of the banking industry is inseparable from the effective supervision of the regulatory authorities.In recent years,based on the three pillars of the Basel Accord—minimum capital regulations,supervision and inspection by regulatory authorities,and market constraints and information disclosure,my country’s regulatory authorities have put forward many institutional requirements for bank operations,but the banking industry has violated laws and regulations.Phenomena are still emerging,which can exacerbate financial market disruptions and may even lead to systemic risks.Therefore,in order to effectively restrain the illegal behavior of banks and create a fair and orderly market environment,the regulatory authorities continue to increase the punishment of illegal behavior of banks,and take regulatory punishment as an important means of bank supervision.However,under the maximization of individual behavioral interests,whether the bank will break the boundary of the rules is a choice made after weighing the benefits and costs.Whether the regulatory penalty can effectively play a role in suppressing systemic risks is still unknown.In this context,the disclosure of penalty decisions provides new ideas for the study of banking supervision,and the effectiveness of regulatory penalties has also become a key issue for academic circles.By collecting and arranging the regulatory penalty data of 25 listed banks in my country from 2009 to 2020,this paper uses a two-way fixed model to study the impact of regulatory penalties on the systemic risk of banks.Heterogeneity in the impact of regulatory penalties on banking systemic risk.The research results show that:(1)Regulatory penalties can significantly reduce the systemic risk of banks.From the perspective of the measurement method of regulatory penalties,increasing the number of penalties and the amount of penalties can both play a role in restraining the systemic risks of banks.(2)Banks of different sizes and risks show heterogeneity in the effect of regulatory penalties on bank systemic risk.Specifically,the effect of regulatory penalties on high-risk banks and large banks is generally stronger than that of low-risk banks and small banks.Furthermore,in the context of market correlation and risk contagion,in order to clarify the possible effect mechanism of regulatory penalties on bank systemic risk,this paper introduces bank individual risk and shadow banking business as intermediary variables for empirical analysis.The research results show that:(1)Bank individual risk is an effective mechanism,and regulatory penalties can reduce bank system risk by reducing individual bank risk.(2)Shadow banking is also an effective mechanism.Regulatory penalties can restrain the expansion of shadow banking by penalizing informal financial services in shadow banking,thereby reducing the systemic risk of banks.According to the research conclusions,this paper puts forward corresponding suggestions for improving my country’s regulatory policies: the regulatory authorities should implement precise supervision of banks’ violations of laws and regulations,improve the law enforcement efficiency of the regulatory authorities,and implement dynamic and differentiated management for different banks,and strengthen shadow banking.Monitoring and management of business development,enhancing bank compliance awareness,and promoting the prevention and resolution of systemic financial risks.