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Type: Conference paper
Title: Market force or goverment regulation: which drives banking capital movements in China?
Author: Fu, Y.
Lee, S.
Xu, L.
Zurbrugg, R.
Citation: Proceedings of the World Business and Economics Research Conference, held in Auckland, New Zealand, 12-13 December, 2011: pp.1-21
Publisher: Social Science Electronic Publishing
Publisher Place: online
Issue Date: 2011
ISBN: 9780980827965
Conference Name: World Business and Economics Research Conference (2011 : Auckland, New Zealand)
Statement of
Yishu Fu, Shih-Cheng Lee, Lei Xu and Ralf Zurbruegg
Abstract: Since the deregulation of foreign entry in 2001, China has introduced, at an unprecedented speed, banking capital regulation to strengthen its banking industry. Through the China Banking Regulatory Commission, it has introduced most standards of Basel l for setting capital requirements. The average bank capital adequacy ratio has increased from - 2.98% in 2003 to 12.2% in 2010. This has occured at the same time as China has experienced remarkable economic growth. This study examines empirically the underlying driving forces of banking capital movements in this country. Through disequilibrium tests as suggested by Barrios and Blanco (2003) and Wall and Peterson (1995), as well as simultaneous tests similar to Rime (2001), we discover that the remarkable improvement in banking capital is primary driven by government reglation rather than market forces. In addition, capital regulation has effectively reduced risk-taking behavours among the Chinese banks.
Rights: Copyright © World Business Institute Australia. All rights reserved
RMID: 0020117534
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Appears in Collections:Business School publications

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