The Regulatory Approach Of The Chinese Financial Stability Research

Financial instability and financial crisis will cause serious economic, political, social and other damage, so it is very important for the functionality and efficiency of financial system, even for the macroeconomic performance. In the 30 years of China's economic reform, as quantity of economic growth increased rapidly, many problems of financial system have gradually come out, financial stability becomes one of the key issues in China's economic development. Based on the previous studies, this paper attempts to analyse the patterns of financial stability regulation in China form theoretical and practical levels.Financial stability refers to the contents of two dimensions, including the good running and full capacity to withstand financial crisis of financial system, which is made up of financial institutions, financial markets and financial infrastructure. Financial stability is one of the main goals of government regulation, and government regulation is an effective measure to ensure financial stability. The general equilibrium model shows that the government regulation is of great significance to the financial stability, but there is a strength border. Based on the intension of financial stability, this paper builds the index of financial stability. Principal Component Analysis is used here to determine the weight of the target, Additionally, mean value treatment is also used as input variables. Measuring results from our model shows that the financial stability of China has been improved to a certain extent from 2004 to 2008, however, the capability to resist external shocks has declined slightly. From a regional perspective of view, the financial system of China runs properly in overall level, but it is very different among the east area, the midland, the west area and the northeast area in 2008.The measurement of supervision is based on the goals of financial regulation, which are very different at different stage of economic development. Overall, the current goals of China's financial regulation is with the financial stability as the leading role, and taking the efficiency and interests of depoitors and investors into account. This paper empirically investigates the evolution and problems of Chinese financial regulation, based on four factors including the cultural and historical traditions, the characteristics of economic reform, the development of financial system, and the goals of financial regulation, we identify that the patterns of Chinese financial regulation needs to achieve the shift from financial separated operation to financial mixed operation.