Research Of The Financial Systemic Risk Of China And It’s Prevention

Since 1980s, systemic financial crisis broke out more and more frequently, and along with the development of economic and financial globalization, systemic financial crisis impact on the world economy more and more deaply. In 2007, the outbreaks of the U.S. subprime mortgage crisis triggered the global financial crisis and world economic recession, so far, the world economy hasn’t seen real signs of recovery. Facing the increasingly destructive power of the financial crisis, financial crisis of potential state-financial systemic risk is increasingly becoming governments, international financial organizations, and academic focus.As a developing country in reform and opening, China’s economy and financial system are facing increasing uncertainty. Paying attention to the current financial systematic risk of China, knowing the characteristics of China’s financial systemic risk, establishing China’s financial systemic risk early warning, monitoring and prevention system in China, are important for preventing the outbreaks of systemic financial crisis in China.This paper mainly studed the Chinese financial systemic risk and its prevention. It deeply analyzed the present situation of Chinese financial systemic risk and its contagious characteristics,and creatively constructed financial stress index of China(CFSI) using financial systemic risk synchronicity indicators. The CFSI can measure the financial systemic risk of China continuously and effectively. This paper also summarized the history in financial systemic crisis prevention and management experience, and put forward the overall ideal and preventive measures on the financial systemic risk prevention, and constructed the financial systemic risk early warning indicators system based on the macroeconomic and financial variables. This paper mainly include five parts, which were devided into eight chapters.The first part was a summary, including the first chapter and the second chapter. The first chapter mainly introduced the theory and practical significance of this paper, Systematically introduced the relevant research of financial systemic risk, and briefly introduced the idea and method of this paper. The second chapter defined the concept of financial systemic risk, expounded formation and contagious mechanism of the financial systemic risk, and analyzed the ideal of financial systemic risk prevention.The second part mainly introduced the status of Chinese financial systemic risk, including chapter 3. This chapter mainly described China’s economic and financial development situation and the status of Chinese financial systemic risk. Since China joined the WTO, the level of opening had improved rapidly, especially after 2006, China fully open the financial industry to the outside world. That makes our country getting easier to be infected by international impact. And, because of the international financial institutions, the contact channel between banking and financial market increased,the firewall effect of divided management system would be weaken. But at the same time, China’s economic structure are constantly optimized, and the ladder development trend of regional economic enhance our external elastic of economic impact. In addition, along with the deepen of our financial market reform and opening, the corporate governance mechanism of financial institutions continuously improve, and multi-level financial markets gradually form, financial supervision technical level is rising ceaselessly, regulatory system is being perfected, which all will increase the elasticity of the financial system in China. That means, China’s economic and financial departments have increased the ability to reduce the impact of impact on economic entity,and the possibility that general impact contag between banking system and financial markets reduce.The third part is the research our financial systemic risk contagion mechanism, including chapter 4. First of all, according to the characteristics of China’s financial system,we established the theoretical analysis framework of Chinese financial systemic risk contagion characteristic. Secondly, using VAR and VEC econometric analysis method and using our financial related data, we empirically tested the congtagion characteristics of our financial systemic risk.The fourth part is the measure of our financial systemic risk, including chapter 5. based on the former research, we choiced the typic synchronous indicators of Chinese financial systemic risk to construct the Chinese financial stress index, and using the monthly data of China between 2002 and 2009, we empirically analysed the degree of China’s financial systemic risk. The empirical results show that:China’s systemic risks are respectively higher than other period’s from April to December of 2008, and in October 2008 China’s financial systemic risk reach the highest since 2002. These results can better fit China’s financial realities in 2002-2009.The fifth part is our financial systemic risk prevention research, including sixth, seventh and eighth chapter. Chapter 6 respectively introduced the experiences and lessons of the transition economies, emerging market countries and developed countries in dealing with the financial crisis and preventing future financial crisis in the past three decades and systematically summarized these lessons to our financial systemic risk prevention for inlightenment. Chapter 7 systematically put forward our financial systemic risk prevention Philosophy and’concrete measures. Chapter 8, using domestic and overseas macro economic and financial variables, constructed our financial systemic risk early-warning index system.The main innovations of this paper are:(1) on the basis of previous studies, we established a financial systemic risk contagion mechanism analysis frame under separate operation financial system. In the analysis framework, we can find, under the legal system of separate operation, international financial institutions are the main medias to spread financial systemic risk in various departments in the country, and they should be strictly regulated to guard against financial systemic risk. (2) on the basis of previous studies, conbined with China’s national conditions, we carefully chose a group indicators which’s data can be acquired timely and can accurate measure our financial systemic risk, construct Chinese financial stress index to real-time monitoring our financial systemic risk. (3) This paper treated the Chinese Financial Stress Index which constructed by synchronized variable of the financial systemic risk as the explained variable, and lagged macroeconomic variables, monetary and credit variables, asset price variables and related foreign countries’macroeconomic variables as explanatory variables. Using stepwise regression, we established the best financial systemic risk forecast equation and built a reasonable and applied financial systemic risk prediction index system.