Impact of Regulatory Penalties and Capital Regulation Pressure on Bank Risk-taking

ZHANG Qiao-yun; DUAN Li-qiang

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Journal of Beijing Jiaotong University（Social Sciences Edition） ›› 2022, Vol. 21 ›› Issue (4) : 87-99.

Applied Economics Studies

Impact of Regulatory Penalties and Capital Regulation Pressure on Bank Risk-taking

ZHANG Qiao-yun, DUAN Li-qiang

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Abstract

Risk prevention and financial stability is an important goal of regulatory authorities. In recent years， the CBRC is increasingly imposing penalties on commercial banks. Can penalties reduce the risk behaviors of the banking industry？ Using the unbalanced panel data of China’?s banking industry and administrative penalty data of the CBRIC from 2007 to 2018， this paper examines effects of regulatory penalties on bank risk-taking. The results show that， firstly， regulatory penalties have significant inhibitory effect on banks’ risk behavior. Secondly， the impact of penalties varies for different banks. Compared with other banks， big banks， large state-owned banks and listed banks obviously show less impact from penalties. Thirdly， capital regulation pressure will affect the inhibitory effect of penalties on risk-taking. Banks with heavier capital regulation pressure are more willing to take risks after receiving penalties. Therefore， while increasing penalties as deterrence， the regulatory authorities should pay close attention to banks under heavier capital regulation pressure to prevent them from taking desperate move and causing serious risk events.

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regulatory penalties / the pressure of capital regulation / commercial banks / risk-taking

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ZHANG Qiao-yun, DUAN Li-qiang. Impact of Regulatory Penalties and Capital Regulation Pressure on Bank Risk-taking[J]. Journal of Beijing Jiaotong University（Social Sciences Edition）. 2022, 21(4): 87-99

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