Effect of bank regulation on financial sector in China

Abstract

This paper tests whether changes in bank regulation will have any impact on financial sectors in China. The historical data on stock prices of the “big four” banks are collected through 2008 to 2013. To study the impact of bank regulation in this time period, this paper focused on several major changes that the banks have made before. The results show that only exchange rate and personal savings have the major effect on the volatility of the banks stock prices. In other words, regulating the exchange rates and personal savings will help the banks to predict their future performance of the financial sector.