Research on Strategy of Commercial Bank Risk-taking Behavior and Capital Regulation Based on Signal Game

This paper analyzes the signal passing effects of the capital regulatory constraints on choose of commercial bank risk-taking behavior by using signal game theory. We get that regulatory authorities should take strict regulation on high-risk banks to restrain their risk-taking incentives and take loose regulation on low-risk banks to encourage their profitability. Then, the supervisory authorities should strengthen the influence on reputation of the regulators and banks, be tougher and increase the penalties for high-risk banks. Moreover, we should increase their efforts, and lower the regulatory cost.