The Influence Of International Short-Term Capital Flow On The Commercial Banking System Stability In China

Since the 1990s, financial crisis has become increasingly common. Although there were various reasons for financial crisis, the influence of international capital flow on financial crisis was discussed by many scholars. Particularly, the impact of international short-term capital flow on banking system has become a very important horizon for us to study the financial crisis.In recent years, due to the increasing openness of capital account and strong expectations for RMB appreciation, a great deal of international short-term capital has flown into China. Owing to the nature of high risk and volatility, international short-term capital's influences on financial system cannot be underestimated. Therefore, in the background of international short-term capital flowing, how to maintain the stability and healthy development of banking system has become an urgent issue.This paper will focus on the influences on Chinese commercial banking system stability brought by international short-term capital flows. We will establish a composite index which indicates commercial banking system stability using factor analysis method, and then measure the stability of commercial banking system in China. Based on the measurement of commercial banking system stability in China, this paper will focus on the transmission mechanism which describes the influence of international short-term capital flow on the stability of commercial banking system. Through the instrumentality of model construction, we will analyze the impact of international short-term capital flows on commercial banking system stability by studying the transmission mechanism namely asset price, and then we will make some empirical analysis on the relationship between them.As a result, international short-term capital inflow has not negatively influenced on the commercial banking system stability in China. Instead, it has a positive effect on commercial banking system stability. However, in the long run, along with the greater openness of financial and capital projects, the negative impact of international short-term capital flow on commercial banking system stability cannot be ignored. Accordingly, against the background of international short-term capital flow, it is significant to strengthen the risk control of commercial banks,...