The Study On Formation Mechanism Of Banking Crisis Which Based On Theory Of Dissiptive Structure

Banking is the core of financing system which is the center of the modern economy. The bankruptcy of banks is differential with common enterprises for it will not only make the bank difficult to survive, but also put a negative impact on the economy development, political stability, society stabilization, even the safety of the country. So the banking crisis is an important problem relative to the public policy, especially in the background that China will enter the WTO downright. How to prevent from the banking crisis, or how to lower the cost of precaution is an important problem we pay close attention to.Banking crisis is that the bank partly or totally lost the function of banking system in financial activities and economic development. It is the transposition of bank developing from normal status to abnormal. Then what the dissiptive structure theory focusing on is how the system develops from chaos to order. So we can study the banking crisis by using the dissiptive structure theory.According to the dissiptive structure, the increase of internal entropy of a system is unavoidable in an opening environment. For the negative entropy stream driven from the outside can not offset the positive entropy, the chaotic status will be reinforced till the system develops to unordered by the random fluctuation. Banking system is dissiptive structure, in the view of the dissiptive structure theory the banking crisis are mainly caused through three channels: The internal frangibility of banks causes the increase of the entropy inside a system. And the outside environment determines the external negative entropy stream which makes effects through internal factors. The banking emergency which enhances the frangibility of banks and leads a qualitative change is a display of the system's stochastic fluctuation. We also do some empirical research on China's banking system with its 15-year development by using dissiptive structure theory. Then we conclude that from 1992 to 1999 there are some potential crises in Chinese banking system.To prevent the system developing to disorder status, in the view of dissiptive structure, in the situation that the increase of internal entropy of a system is unavoidable, the only way to prevent chaos is to lead sufficient negative entropy stream and to control the stochastic fluctuation factors. Therefore, this paper presents three countermeasures to prevent banking crisis: building up efficient banking supervision system, controlling the pace of financial liberalization, and constructing emergency management mechanism.