Risk Analysis Of International Short-term Capital Flows In Asia-pacific Region

Since the 1990' s, one of the most striking phenomena is that some emerging Markets economies have witnessed a series of financial crises. It is showed that those financial crises are commonly characterized by the reversal of International short-term capital movement before or after the crises. Based on such starting-point, the dissertation makes a systemic analysis on the new features of International short-term capital movement against the background of globalization of finance, clearly points out that the intrinsic instability of the short-term capital movement could escalate into abnormal system risk, which could result in financial crises if combined with the intrinsic vulnerability of financial system of the emerging markets.The whole dissertation is organized as followed: chapter one makes an introduction about the causes, significance and general architecture of the study.Chapter two makes a full review of the features of international short-term capital movement against globalization of finance, establishes a generally analytical framework, of which the main point is about the speculative feature of short-term capital movement.Chapter three demonstrates the relationship between the short-term capital movement and macroeconomic policies. Based on Mundell-Fleming model, the chapter discusses further the match of policy tools by adding the financial derivatives, so that this extension gives an explanation of the failure of IMF' s prescription on Asian crises. Chapter four turns to the relationship between the short-term capital movement and bank run .The twin crises (the currency crisis breaks out side by side the bank run ) have become the main type of financial crisis since the 1990' s. As we all know, the banking plays a dominant role in the financial system in emerging markets. By applying the model of the twin crises, we can conclude that the short-term capital movement is the crucial joint between the two kinds of crises.Chapter five makes a full analysis of the market risk and the transition (or Contagion) of market risks resulting from the short-term capital movement. In addition, this Chapter also examines the mechanism of speculation on market. Chapter six attaches more importance on the relationship between the institution arrangements and the short-term capital movement risk. The examination shows that the essence of financial crisis is the unfair exchange of financial capital from industrialized nations with physical capital from the emerging markets, which results in the transition of inflation from industrialized nations to the emerging markets.Charter seven analyzes the risks arising from china' s accession to WTO. On summing up of lessons from emerging markets, I think the most challenging risk China will confront is the serious vulnerability of financial system, therefore, China must open capital accounts in a prudential way by which gradual opening-up arrangements will be adopted to avoid risks. Furthermore, with a view of the global or regional risks incurred by the capital movement, this chapter also pays attentionto the reforms of the international monetary system and the regional monetary cooperation in order to reduce risks from capital movement as much as possible. As to the reforms of international monetary system, the authors argues that the most two urgent things are to strengthen mechanism of the risk supervision by the Bank for International Settlements (BIS) and to reform the function of lender of last resorts by International Monetary Found (IMF). With regard to the Asian-pacific regional monetary cooperation, the author emphasizes the future of cooperation might head towards exchange-rate union according to the Neo-institutional economics, and therefore, puts forward two innovative concepts: the Sub-regional Compact Exchange-rate Union (SRCERU) and the Sub-regional Networks Exchange-rate union(SRNERU). These two concepts contains the seeds of establishment of monetary union in a gradual way because of great differences among Asian-pacific economies in de...