Analysis On Application Of VaR Model About China Security Market

Financial risk is a key subject in financial industry, especially under economic crisis caused by the US subprime. Well management of financial risk becomes the core competitiveness in financial system. However, identification and measurement of risk is the base of financial risk management. This paper is focus on introduction of the well-used model about risk measurement - VaR model.VaR model came into being in 1990s. It has been widely used in both financial institution and supervisor department because of its simply and perceptual intuition. As a main measurement of financial market risk, it reflects the essential of risk. But its use in china market is just beginning and it use is mainly in bank sector. This article is about VaR model's application in security market.The first sector of the paper analyses the essence of risk and financial risk. On the base of difference of measurement methods, I give the definition of VaR. Then use an index and two stocks to prove the application of VaR model. In the final, I draw a conclusion that VaR model just apply in some time. The main reason is the imperfect market, structure of investor and interference of government.