Research On Banking Crisis And The Financial Safety Net

As distributors of resources, suppliers of liquidity and payment service, banks are playing significant roles in the national economy and political stability. However, the banking system tens to be unstable and vulnerable to crisis. In light of the frequent crises and their negative impact on the society and economy, a so-called "safety net" has been widely established as a specific regulation measure. This thesis has carried on research to the crisis of the bank and financial safety net question of preventing and manages the crisis of the bank. This thesis consists 6 parts altogetherThe first chapter is introduction. Through analyzing the trend and characteristics of banking crises, explaining and interpreting relevant research achievements home and aboard, the research orientation and its implications are raised.The second chapter introduces the theories of the banking crisis. Firstly, This thesis explains the concepts of banking crisis , monetary crisis and financial crisis, and then points out the connection and difference between them. Then it carried on the narrow sense and broadly-defined definition to the financial safety net concept from forming the key element. Secondly, it has combed the traditional theory of banking crisis, mainly introducing " the cycle theory ", " the monetary theory", "the panic theory" and "the system theory". These theories have explained the outbreak and infection of banking crisis and from different angles separately. Finally, it introduces the latest " franchise value " theory model especially. The model explains in the imperfect market from a new angle, the relation between the license plate of bank and bank crisis and policy implication.The third chapter has an in-depth research on the mechanism of banking crisis. Firstly, in order to provide a research framework for understanding the internal reasons to make the bank in crisis, such as maturity mismatch, high-ration liability operation, information asymmetry and high sensitiveness to the assets price fluctuation, a systemic study is conducted on its internal instabilities and mechanism. What's more, combining with case studies, it is discussed that how government intervention, public and financial liberalization, the external factors, are likely to cause banking crisis. Furthermore, systemic research is pursued on negative effects brought by banking crisis such as economic decline, policy intervention and currency instability.The fourth chapter focuses on financial safety net. Financial safety net helps toprevent crisis and mitigate their negative impact, namely banking supervision, role as a lender of last resort of the central bank and deposit insurance are analyzed. Secondly, the author conducts comparative studies on institutional arrangement of the financial safety net in other countries.The fifth chapter is on analyzing the potential bank crisis of Chinese banking and validity question of the financial safety net. Risk profile and financial strength of Chinese four state-owned commercial banks in terms of asset quality, capital adequacy, bad loan reserves and profitability are analyzed in systematic way. Analysis on the validity of the financial safety net of China mainly is carried out from the respects of the main content of the financial safety net and existing problems.The sixth chapter is on how to perfect the institutional arrangement of the financial safety net of China. Based on the above analysis, the author puts forward the concept of " financial safety net border ". According to " financial safety net border" and lessons from the foreign successful methods, the author proposes holding the bank supervision of China accurately, structuring effective mechanism of lender of last resort and establishing system of deposit insurance of China, etc. Finally, the author puts forward the corresponding policy recommendations.