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Prudential Rule and Its Effect on Banking Risk Management in the Case of Chinese Banks

Prudential Rule and Its Effect on Banking Risk Management in the Case of Chinese Banks
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Author(s): Abdelkader Mohamed Sghaier Derbali (Applied College, Taibah University, Saudi Arabia)
Copyright: 2024
Pages: 16
Source title: Recent Developments in Financial Management and Economics
Source Author(s)/Editor(s): Abdelkader Mohamed Sghaier Derbali (Taibah University, Saudi Arabia)
DOI: 10.4018/979-8-3693-2683-1.ch003

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Abstract

The capital structure and regulatory process are the most important elements that identify decreased risk taking by financial institutions. This study aims to investigate the influence of banking regulatory processes on banking risk. The authors propose to test certain number of regulatory mechanisms, which may have an impact on banking risk. For this, they employ a sample composed of 20 Chinese banks over the period from 2010 to 2022. The results obtained can contribute to understanding the nature of the relationship between certain parameters and regulatory structures on the risk of insolvency. First, this chapter demonstrates that there is a statistically unimportant negative nexus amongst the first regulation of capital indicator and risk taking, however for the second regulation of capital indicator we remark that has a positive and important impact on the risk enchanting. The authors can confirm that capital regulation is a crucial indicator in banking risk. Then, they recommend that the supervision utilized by banking regulation must be strengthened by internal banking mechanisms.

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