Early Warning Study On Financial Failure Of Securities Companies In China

During 2001 to 2006, large numbers of securities companies fell into bankruptcy, the CSRC(China Securities Regulatory Commission) had adopted some measures to solve this industry crisis, but it still made large loss to investors, shareholders and creditors. This thesis attempted to build financial failure forecast model about securities companies. In fact, risk management includes risk identification, risk forecast and risk treatment, if we can discover the risk ahead and take some relevant measures, then the risk management cost will be lower.The risk forecast method includes qualitative analysis and quantitative analysis. In the foreign countries, risk management is the combination of qualitative analysis and quantitative analysis. On the one hand, qualitaitive analysis is the premise of quantitative analysis, on the other hand, quantitative analysis is more scientific and accurate. At the present time, the authority mainly adopts qualitative analysis, this thesis put emphasis on quantitative analysis, in order to provide a new means for our country's securities companies' risk early warning, which is the innovation of the essay.In the study process, we defined the securities companies who had been disposed during 2004 to 2006 by the CSRC as the financial failure companies, selected 24 of them as the failed samples, and according to the asset size, choosed another 24 healthy companies as the paired samples. Through analysing the reasons of the financial failure, we designed a series of financial index.The empirical study firstly screened the index using statistic methods, for example: nonparameter test, relevant test; secondly built the linear discriminant model, quadratic model and logit model, in the end, by comparing the discriminant effect, we choosed the linear model which had the best dicriminant accuracy as the final model.The emperical result can provide valuable information for the supervisory authority, excutive suite, investors and banks. Moreover, other financial section such as banks and insurance companies can draw on the experience of this study.