The Theoretical Analysis And Empirical Study Of China's Banking Vulnerability

Financial system is the core of modern economy. The banking system is the core of financial system. It plays an important role in the national economy. The enormous risk accumulated by it is a heavy topic when looking at Chinese economy. Presently, China is in the process of financial system's reform, which has led to a lot of uncertainty in the economy. Especially after the full opening of China's banking to the world, the fragile of banking is faced with more severe challenges. To maintain the banking stability is indispensable to the future development of Chinese economy. Therefore, researching on the banking fragility, analyzing the deep-seated causes of the banking fragility, bringing forward the countermeasures of preventing and resolving the banking fragility is of great theoretical and practical meaning to improve the efficiency of the allocation of banks'funds, to fully exploit finance's active function in economy and to maintain the national economic development stable and sustainable.Firstly, the thesis defines the banking fragility. It also points out that it is a process from quantitative change to qualitative change through construing the relationship among banking fragility, banking risk and banking crisis. In view of the unique nature of Chinese economic development, it analyzes the special causes of China's banking fragility from micro, macro and financial system's structural changes. And it emphasizes the influence of banking fragility imposing on economy from four different aspects. Then it expounds the present situation of our banking fragility on the basis of capital adequacy, non-performing loan, return of assets and liquidity proportion and makes a preliminary measure of the vulnerability of China's banking by using the macroeconomic method. According to the measure results and learning from foreign experience and on the basis of the actual situation in China, a relatively complete set of index system is established from macro, mesne and micro levels. 18 measurable targets are selected and the 18 indicators'datum from 1985 to 2006 are collected. Through processing and analyzing this series of the original datum, the thesis demonstrates China's banking fragility by using multiple logit regression model. Lastly, based on empirical outcome, this thesis brings forward some specific suggestions for lowering the fragility of China's banking. The thesis conducts a comprehensive and in-depth analysis of China's banking fragility by using both the empirical and institutional methods. The generative mechanism of the banking fragility has been studied theoretically and the causes have been analyzed empirically. So we have found the key factors deteriorating the problem of China's banking fragility, which has enhanced the theoretical study and empirical analysis to a higher level. Our study has certain theoretical value and better practical value. The thesis brings forward the suggestions of lowering the present banking fragility and preventing the further accumulation of the banking fragility which potentially leads to the banking crisis. The suggestion is of high value for furthering banking reform.