The Study Of The Relationship Between Financial Openness And Financial Instability

With the development of the financial liberalization, developing countries face the financial disability even financial crises day by day from the 1980s. By now, almost all the developing countries which have opened their finance have suffered from the financial crises. So, it seems more and more necessary and important to handle the problems of the relationship between financial openness and financial stability in these days, especially for developing country. China is no exception because of the open policy of the financial markets after entering WTO.This paper is focusing on the study of the relationship between financial opening and financial disability. It also sets up a financial openness measurement system, which makes the financial openness measure and control easier than before.The paper is includes three main sections.In section one, the paper starts with a brief discussion on the definition and the measurement of financial openness. After that, it sets up a new financial openness measurement system that is much measurable and practicable for modern financial openness condition.In section two, the paper presents a deep analysis on the relationship between financial openness and financial instability. This part discovers the determinants and intrinsic factors between these two phenomena through empirical and case study.Based on the study of the first tow parts, the last section measures the degree of financial openness of China both from qualitative analysis and quantitative analysis. After that, it goes on to discuss the determinants of the instability of China finance. On the basis of this examination, the paper puts forward some policy suggestions about how to open the finance market appropriately, and how to improve the financial efficiency of our country as well as maintain financial stability.