The effect of regulatory pressure on the capital level and risk level in Chinese banks

The outbreak of the US subprime mortgage financial crisis swept across the world in 2008 and international regulatory authorities adopted the most representative measure-Basel III- against the crisis in 2010. The present work brings insight into the effect of capital regulation on commercial bank based on the panel data of ten Chinese commercial banks from 2006 to 2013. This paper uses the multiple linear regression equation which was established by Shrieves and Dahl. This work chooses capital level and risk level as the dependent variables. The evaluating variables are bank´s size of asset, net profit level, rate of bad loans, regulatory pressure and ownership structure. The results show that the regulatory pressure has negative effect on capital level, while nearly has no significance on risk level.