Study On The Theory Of Financial Crisis Transmission

Financial crisis transmission is an important part of financial crisis theory, as it is not only the intermediate part between the cause and the result, but also the theoretical basis of Early Warning Systems and bail-out policies. The dissertation mainly discusses the financial crisis transmission under the circumstances of contemporary economy and finance.The dissertation makes clear the environment of contemporary financial crisis transmission and explains the route and the extent on the basis of clarifying the meaning of the transmission. It believes that financial crisis transmission is the course of crisis affecting financial system and real economy and the interaction between finance and economy. Moreover, it discusses that the macro environment of crisis transmission includes financial liberalization, financial fictionalization, and economic globalization and so on, and the micro environment of crisis transmission includes the increase of participants in market, the change of business and the risk-bearing way of financial department. Further, the crisis transmission is divided into that in closed economy and in open economy according to the transmission area.As to the financial crisis transmission in closed economy, the dissertation analyzes how the transmission happens among financial market crisis, financial institution crisis and foreign debt crisis, and explains the formation of comprehensive financial crisis. Then, it analyzes the transmission mechanism of crisis affecting real economy and the effect on output and employment. In addition, it makes empirical analysis about crisis transmission in closed economy taking Latin American debt crisis in 1980s, Asian financial crisis in 1997 and global financial crisis in the early of 21st century as examples.As to the financial crisis transmission in open economy, the dissertation analyzes the transmission through international trade channel, finance channel and expectation channel. When analyzing the transmission through trade channel, it discusses direct and indirect trade transmission, and explains the effect of mechanism of income, price, balance sheet effect, trade finance and means of payment on crisis transmission. When analyzing the transmission through finance channel, it discusses the expression of the transmission, and mainly examines "common debtor effect" in the theory of crisis transmission. And then, it extends the Model of Optimal Asset Portfolio to explain the transmission mechanism. When analyzing the transmission through expectation channel, it emphasizes the important effect on the transmission of the change of expectation by imperfect information.In the course of the transmission, Early Warning Systems (EWS) and bail-out policies become the institutional constraints of the free transmission. As to Early Warning Systems and crisis transmission, it examines the meaning of effectiveness of EWS, and analyzes how the effective and ineffective EWS affecting the crisis transmission. Then, it uses the instruments of Game Theory to explain how the information accessibility of EWS or information difference affecting the initial power and the transmission route. As to bail-out policies and crisis transmission, it analyzes the relationship between bail-out policies and crisis transmission, and explains how bail-out policies affecting crisis transmission. Besides, it argues that bail-out policies, which have proper time, proper scale and proper content, would interrupt the transmission and the policies, which are carried out taking their benefit as staring point, would produce positive and negative spillover effects on the other countries.What is more, it investigates the transmission in open economy, taking the three above-mentioned crises as examples, in order to provide evidence for the transmission through trade channel, finance channel, expectation channel and the effect of institutional constraints on the transmission. Further, it makes quantitative analysis on the existence of crisis transmission by VAR approach, and makes empirical study, taking the transmission through trade channel as an example, on transmission mechanism.Finally, it discusses the transmission results which are caused by the crisis free transmission and institutional constraints. It sums up the differentiation between advanced economies and emerging and developing economies, among different advanced economies, different emerging and developing economies, taking the global financial crisis induced by "sub-prime mortgage crisis" in the early of 21st century as an example, and then analyzes the reasons for differentiation from the point of the role in "sub-prime mortgage crisis", dependence on international capital, dependence on international trade and so on.