Analysis of the Banking Risk Behavior with the Adjusting Strategy of Capital Adequacy Ratio under New Basel Accord

摘要

In accordance with "Basel Accord", no matter the old, new or revision in 2009, banks raise their capital adequacy ratio in two ways: numerator strategies by increasing the core capital or supplementary capital to increase the total amount of capital, and denominator strategies through various financial techniques to reduce the total risk exposure. By learning and modifying the relevant theoretical models, this paper analyzes the strategies of China's commercial banks in raising their capital adequacy ratio and its effect on risk preference of banks. Through empirical research, it is found that it is currently the numerator strategies that dominate China's banks when raising the capital adequacy ratio. After analyzing the important factors behind the behavior of China's banks, this paper points out that, because of the characteristics of the capital cost, the numerator strategies entail great expense. Moreover, they are difficult to sustain due to the low efficiency in reducing the overall risk exposure, especially when comparing to the experience of implementation of the Basel II from international active banks. On the contrary, in China, the use of the denominator strategies are not only conduct domestic active banks and large banks to improve the capital adequacy ratio and to enhance their risk management by taking advantage of advanced financial technology, but also rather important for the regulatory authorities to encourage bankers to operate prudently and alter their inertia thinking of excessive reliance on "extensive" scale expansion in banks developing strategy.