Study On The Early-warning And Monitoring System Of China's Financial Fragility Under The Open Economy

Basic connotation of financial fragility emphasizes the fragility as the nature of financial industry -determined by the characteristics of its high liability. This is the financial fragility in narrow sense. In a board sense, financial fragility refers to a financial situation with an inclination of high risks, including all the accumulation of risks in all the financial fields, such as liability financing and equity financing. Financial fragility has the trend of self-reinforcement with the expansion of financial market. With China's finance further opening to the world, financial situation becomes more complicated and the conduction effect increases between domestic and international after China entered WTO, While the problem of financial fragility has become striking. If not paying more attention, it will threaten the stability of Chinese economy. Therefore it is necessary to establish the early-warning and monitoring system of China's financial fragility.The first part of the article introduces the evolution of financial fragility's theory. The research of financial fragility mainly includes the fragility in traditional credit market and in financial market. The fragility in traditional credit market is expounded through Minsky's "Financial Fragility Hypothesis"-, KregePs "Margins of Safety" doctrine and imperfect information. The fragility in financial market stems from the fluctuation of asset price and the interaction of fluctuation. The second part analyzes financial fragility at present in China, existing in several aspects such as banking system, stock market, finance and foreign capital. We find out there is high financial fragility so that it is a realistic and urgent task to establish the early-warning and monitoring system. The third part overviews the study of the early-warning and monitoring system that the economists > international organizations and some central banks have done. We hope some useful experience can be obtained.By applying the quantitative multivariable factor analysis method, the fourth part puts forward the establishment of the early-warning and monitoring system in light of the selected 22 economic and financial indicators. As a result of the factor analysis, the total financial fragility situation is rigorous and the fragility in the banking system, stock market, and national debt needs paying more attention. Finally, some suggestions are made to handle the financial fragility, i.e. to strength financial regulation, to reinforce the stability of the banking system, to standardize the stock market, and to carry out positive and stable fiscal policy.Gao Huili (Finance) Directed by Hu Yanjing...