Cater to the Regulatory Requirements and the Application of Fair Value Accounting - Evidence from Listed Banks in China

This paper investigates the relationship between fair value accounting and the behavior adjustment of commercial banks which is aimed at catering to the regulatory requirements by using a dataset from Chinese listed commercial banks from 2007-2011.The empirical results show that (1) The preferences of the adoption of fair value accounting in China's commercial banks do have a significant impact on their capital adequacy ratio. (2) The lower the core capital commercial banks have, the more the banks' managers are inclined to own trading financial assets. (3) When commercial banks anticipate the current capital adequacy ratio at a lower level, the managers will tend to own more trading financial assets. This research justify the modification of the “Rules for Regulating the Capital Adequacy Requirement of Commercial Banks”