Abstract

On financial system, Bank is the most important financial intermediaries in economy. It has played a central role to the entire financial system. The bank’s capital also has played an important role on the bank risk management and governance. This study issued the function of the financial capital adequacy ratio on Bank supervision system. The article establish the multiple regression model analysis the relationship between various bank indicators and capital adequacy ratio, point out too high of capital adequacy ratio is negative to the bank’s operation and regulation. Through empirical study, we explored the effectiveness of the regulatory capital adequacy ratio.

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