The Study Of The Flow Of Stort-term International Capital

With the Collapse of Bretton Woods System, the World Economy and Finance develops to the Liberalization, Internationalization and Integration. The tendency of Integration of world economy and Globalization of international finance is more and more clear. The capital flowing on a large Scale is the important economic phenomenon in this tendency. With the rapid development of stock market and derivative market, capital flow is more and more short-termism. The function and the status of short-term capital is more and more great and high in the pattern of capital flow. It has become the most important force in the world capital market nowadays. It can exert the great influence on the economic development, market stability and financial safety of one country or the whole world. Even, it is the culprit of the currency or finance crisis in many developing countries. With the our country's opening proceeding steadily and the capital account's control deregulating gradually, the barriers of short-term capital flow in China is cleared step by step. The good regime condition is in favor of short-term capital flow. All kinds of arbitrage capital flow in China. It has effected our economic grow, assets price rise and policy validity. If capital flow reverses, it is possible to endanger our financial safety. Our country is facing the choice how to cope with the continuing inflow and the potential reversing. So, the study not only has the theoretical significance and the policy implication.The contents of the thesis for the Doctorate consist of three sections. The first section is the start-point of the thesis and the important theoretical basis. We'll study the background, connotation, category and feature of short-term international capital fully and deeply. Meanwhile, we'll observe the history of its flow combining with the transition of the International Monetary System. The second section is the core theoretical framework of the thesis. We'll emphasis on the driving factors of short-term international capital flow, probe into the effect of it deeply and analyse the supervision of it fully. The third section is the destination of the thesis. We'll estimate the scale of short-term capital flow combining with its flowing channels, study empirically the main motivations by building the quadruplex arbitrage model and analyse the effects, shocks of it continuing inflow China and give the suggests on it.In the first section, we'll analyze the newly dynamics ant trait of the international financial market, point out that the short-term capital has been the most active power in the today's world economy to endanger one country's financial safety and emphasize the significance and necessity of this thesis's study. Secondly, we'll redefine the short-term capital according to the motivation of investor and the liquidity of asset and identify that the short-term capital in China also conclude the long-term speculative capital, endow new meaning of it and explicit the object of study. Last, we'll observe the history of short-term international capital flow combining with the transition of the International Monetary System. We'll display the different connotations, flowing mechanism and impact in different history, analyse selectively the pattern and trait of short-term capital flow in Jamaica System, especially the stages of globalization and de-leverage in order to establish the base of frame of monetary crisis due to the reverse of capital flow.In second section, we'll emphasis on the driving factors, influences & effects and supervision of short-term capital flow. The driving factors conclude the interest rate, exchange rate, linkage of the interest rate and exchange rate and the avoiding risk. So, the interest rate driving theory, exchange rate driving theory, linkage of the interest rate and exchange rate driving theory and risk driving theory can all explain the reasons of short-term capital flow. We'll bring the leverage and de-leverage into the interest rate driving theory and establish the McDougal's Model in leverage condition. At the same time, we'll bring the equity premium and the tax differential into linkage of the interest rate and exchange rate driving theory combing the motivations of it flowing in China and build the asset parity, the interest rate parity in the tax differential condition and the asset parity in the tax differential condition in order to establish the academic base of quadruplex arbitrage model. The short-term capital flow maybe affects the stability of macro-economy, weakens macro-control policy effects, even causes the policy failure and endangers the financial safety. We'll probe into global reverse of capital flow and developing country's monetary crisis because of the American Subordinated Debt Crisis. We'll establish the analyzed frame of monetary crisis due to the reverse of capital flow, discuss the interaction mechanism of leverage and de-leverage in crisis and provide the new theoretical explanation to the present developing country's monetary crisis. Because of the strong speculative and tremendous scale of short-term capital, we must strengthen supervision.In the third section, we'll discuss the channels of short-term international capital flow in China to estimate the scale of it, build the quadruplex arbitrage model to analyse empirically its main motivations, analyse the effects, shocks of it continuing inflow China and give the suggests according to the traits, tendency, scale and effect of it flow. The one half opening and one half control's structure of BOP and entering easily but going out difficultly, encouraging long but limiting short's characteristic of capital controls are determined the imperceptibility of short-term international capital flow in China. So, we must re-estimate the scale of it combining with the trade mis-invoicing, capital inclusion and illegal private bank. Only this, we can uncover the puzzle of hot money outflow. Through the empirically study of quadruplex arbitrage model, we find that the arbitrage of exchange and price is the main motivations of short-term capital continuing inflow China. The appreciation anticipation of RMB and rising price of stock and real estate are the main driving factors. Although interest arbitrage and tax arbitrage are also the influencing factors, but not the main factors. They are on the ground of arbitrage of exchange and price derived motivations. The short-term capital continuing inflow China has cause economy overheated, inflation stress increasing, asset price rising, asset bubble accumulating and macro-control policy effect weakening. So, we must block up the channels of its flow. This is the precondition of precaution for the speculative and impact of short-term capital. Secondly, we must prove into the mechanism of exchange rate determination. Weakening the appreciation anticipation of RMB is the essential measure to prevent the arbitrate exchange rate capital inflow China. Thirdly, steadily pushing capital account opening, making recessive capital explicitizing is also the important measure. Last, optimizing the structure of economy, trade and demand is the fundamental measure to the reverse of capital flow in China. At the same time, we must be careful of the development of derivatives, carry out the layer management on capital flow and prevent the monetary crisis of capital reverse.