Theory And Empirical Study Of Liquidity Black Hole In Money Market Of China

Broken out in the summer of 2007, affected the all world till now, the global financial crisis, displayed us an amazing phenomenon of the global liquidity disappearance in a very short-term. Many large financial institutions have also illiquid. The financial crisis tells us: financial market liquidity has considerable uncertainty, volatility and jumping.This article use expectation theory and system scientific theory analyzed financial markets liquidity black hole phenomenon. Expected normalized and self enhancement Mechanism enable financial system scale rapid expansion, destructed the supply and demand balance, and then came a sudden rapid contraction of the size, liquidity crisis came out. The crisis, in turn, affected the financial system. It is the positive feedback trading and self-reinforcing mechanism, which enforced the expectations normalized speed and degree. So the liquidity black hole appears.Then the study test shows that our money market traders widely used positive feedback trading strategies. Once the transaction cycle to reach a certain limit, if some incentives happen, market liquidity will instantly collapse, liquidity black hole appears. This is one important reason of why it seems more and more extreme conditions. From the time of vertical perspective, the volatility of the market is also growing. The probability of liquidity black hole phenomenon is increased more frequent. All market participants must pay attention to it.After empirical testing, this paper explored the theory sources of liquidity black hole in money market. Dissipative structure of the currency market, convergence of the internal structure, convergence of the banking system's business strategy, the external policy of incentives to stimulate economic recovery and the homogenization interpretation of information determined market liquidity black hole appears inevitable. Many homogenization factors produced the order parameter. The convergence of views of the market which caused liquidity black hole appears.Finally, the article proposed we should, form external perspective, change the mechanism of market regulation, improve the macroeconomic environment and ecological environment of the financial system, and, form internal perspective, increase participants multiple choice, develop the market's different expectation, to improve our liquidity conditions in financial markets .