JOURNAL OF BEIJING UNIVERSITY OF AERONAUTICS AND A ›› 2016, Vol. 29 ›› Issue (5): 71-75.DOI: 10.13766/j.bhsk.1008-2204.2014.0513

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Empirical Study on Determinants of Capital Adequacy Ratio of Listed Commercial Banks

ZHANG Ruiwen, HE Nana   

  1. School of Management, University of Science and Technology of China, Hefei Anhui 230026, China
  • Received:2014-10-13 Online:2016-09-25 Published:2016-08-23

Abstract:

This article empirically tests the impact of accounting accruals and financial policy on capital adequacy ratio of Chinese commercial banks, with the sample of the data of 2005 to 2013 years of 16 A-share listed commercial banks of China. The results presented in the test suggest that the bank managers may use accounting accruals (i.e., loan loss provision) and financial policy (i.e., dividend change) to adjust the level of capital adequacy ratio. The article concludes that when bank managers need to raise the level of capital adequacy ratio, they will increase loan loss provisions of provision for loan. It also concludes that although distribution of dividends will consume some profits, it can bring more capital. The study also found that the impact of provision for loan loss provisions and dividend changes on capital adequacy ratio has a complementary relationship.

Key words: commercial bank, capital adequacy ratio, loan loss provision, dividend payout, accounting policy, financial policy

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