Financial Openings, Economic Growth And Financial Stability

Under the condition of closed economy, resource collocation is limited in a correspondingly small range. At the same time, the efficiency of the general equilibrium of resource collocation is low apparently, compared with the state after range enlarging, and the range of resource flow and playing comparative advantage can not achieve optimization result also. In this time, open become a inevitable trend. Open itself is intrinsic demand of resource collocation efficiency, and is a inevitable trend of economic development too.Financial openings induce growth effect is out of question. It can promote the embodiment of comparative advantage and deepen of division of labor. However, from other point, the result of open make the macroeconomic evolution to general equilibrium result. To the individual economy, namely to the all countries under the condition of open economy, it can cause more indetermination, that is to say the degree of financial and economic stability can change, especially the change of capital flow and marketization exchange rate and interest rate index can induce economic fluctuation increase. So financial openings can result in two kinds of effect, that is to say the double effect of economic growth and financial stability. We research the essence and connotation of financial openings, and test the measurement index of financial openings, and using the degree of financial openings research the function effect to economic growth and the influence to stability.The paper is divided into seven parts. In the first chapter we introduce financial openings and macroeconomic practice. We define the connotation of financial openings and summarize systematically measure method of financial openings and analyze the intrinsic relationship between financial openings and economic growth, financial openings and financial stability. And then we give the order and opportunity choice of financial openings and discuss the policy choice and openings mode and means.In the second chapter we introduce theoretical basic. First, we expatiate Greyly and Shaw's research result and demonstrate financial liberalization and the theoretical basic and realistic cause of financial restraint. Second, we give the mechanism and path and result of economic growth under the condition of open economy. Finally, we analyze financial stability and financial safety under the condition of open economy.In the third chapter we discuss institutional economics of financial openings. We research financial openings from the institutional transition, and give the intrinsic demand and essential trend that institutional un-equilibrium status induced. We educe the order and level of institutional transition through analyzing Chinese practice, and then give the order and opportunity choice from the aspect of financial opening system. The conclusion indicates that financial openings face the problem of institutional choice, especially the means of forced institutional transition and induced institutional transition. It is important that during the reform progress, the advantage of secondary action organization must be incarnated adequately, so that institutional transition has more rationality.In the fourth chapter we do data analysis for china financial openings situation. We empirically test financial opening status and degree. We give the measure methods of financial openings level, and summarize China financial openings process, and then based on Chinese financial data measure financial openings level by four kinds of methods. We use co-integration, recursive estimate and Granger causality test and so on to research financial opening level index, and fit financial openings level and China's reality,and research the relation between financial openings and China's reality. There are some differences in four kinds of methods measuring financial openings. Actual capital flow is consistent with FH index. The result of financial capital flow is not consistent with interest rate parity approach completely. The level of long capital flow is bad, and capital flow increases in money market. These empirical results make preparations for farther analysis. And then we give function and effect and order choice of financial openings.In the fifth chapter we empirically test China's financial openings and economic growth. Based on financial openings indexes and measure results gave by the fourth chapter. We fit them and economic indexes, empirically test the relation between financial openings and economic growth using Granger causality test, co-integration method, impulse response function and VAR model. We give the empirical result testing the relation between export and growth, and then research the relation between capital flow level and economic growth. The empirical result indicates that export and growth have the same function direction. The functions of financial openings indexes to growth have different results. Actual economic field openings can promote economic growth, however capital flow in capital market can not promote economic growth obviously. From the empirical results, we can draw the concrete conclusions are that financial openings level is not enough in China, and the effect of financial openings function to economic growth is not obvious. From capital flow, capital openings level improvement can stimulate capital flow speedup. Financial openings must have hierarchy and phase features.In the sixth chapter we empirically test financial openings and financial stability in China. Based on the relation between financial openings and financial stability, we investigate the relation between capital flow and financial stability, and give qualitative estimation and theoretical analysis result. And then we construct empirical model by researching the relationship between financial openings index and exchange rate change, between financial openings index and debt index, between financial openings index and financial development. Finally we find the actual result of relation among them, and find reality basis to Chinese financial opening result. The empirical results indicate financial openings is not related with exchange rate, because of the state of government controlling exchange rate. When exchange rate floating, the relation of financial openings with exchange rate will increase, and the relation will induce the fluctuating level of exchange rate to increase and to intensification of financial system fragility. There are some kind of trend in the relation between financial openings and government debt, that is to say openings level promotion can induce government debt income to descend and debt payout increase. However, the addition of both debt income and payout can induce financial openings level to increase. This means that government should make debt budget well, and then carry out financial openings. From financial development index, financial development is prior to financial openings, that is to say finance itself need fulfill deepening development in order to ensure financial openings proceeding reasonably and orderly.In the seventh chapter we analyze the order and opportunity choice of financial opening. Based on empirical result and Chinese reality, the opportunity choice of financial opening should do that financial development before financial opening, debt payment stability is precondition of open, the fluctuation of exchange rate will increase with the degree of financial opening. From order choice of financial opening, reality economic opening stimulates output, the competition of finance institution admittance increase, financial capital flow increase marketization pressure, the exchange rate and interest rate floating increase financial control cost. To sum up financial openings order is decided by the influence of financial instability, that is to say from unobvious function to unobvious it can divided into four stages, that is actual economic field openings– financial institution access– financial capital flow– exchange rate and interest rate floating. During the openings process, it is process that system from imperfect to perfect.