Analysis And Empirical Research Of The Financial Fragility In China

With the accelerated process of globalization and the development that financial system reforms, the risk of the financial market turmoil is increasing. This thesis aims to, in the background of China's national conditions, find out the factors that influence the level of financial fragility and make early warnings, so as to guard against and defuse financial crisis and take corresponding measures.This study carried out in the following ideas:first, get preliminary knowledge of our financial system fragility by reading comprehensive large literature, combing with the actual development stage of China's market, from macro to micro level over many aspects, by qualitative analysis of multiple perspectives through the banking system in China, the financial system, monetary policy, foreign exchange market and capital market situation. second, using factor analysis of multiple statistical to extract seven major aspects of the total 27 indicators of public factors, and determine the degree how factors influence the level of financial vulnerability, thus the annual trend of China's financial vulnerability from 1991 to 2009 can be obtained, and the real situation results were well confirmed. Third, using filter way to find out long-term trend of financial vulnerability, and make early warning to financial vulnerability to take more dynamic and effective early warning crisis management. Finally, based on the above analysis and research, measures and recommendations to prevent financial fragility are proposed.Through research, we find that the vulnerability of our financial system is emerging a relatively clear trend. From 1991 to 2000, it first increased and the decreased; in 2009 it showed a significant increase. From the seven common factors extracted, we find out that the financial fragility has strong relations with macroeconomic environment of China, the macroeconomic environment even plays a leading role levels; Since 2007, bank credit and financial system unstable has become the most closely, especially the Non-conventional credits in 2009 stimulating economic growth has rapidly reversed the decline of financial fragility. In the condition of the current financial fragile level rising, it is very important to strengthen our bank credit management level to reduce the vulnerability. This paper also finds that the basic conclusions is the same as actual situation, and the model gives us "red light" signal when the level of financial fragility is higher,or "green light" signal. And the model shows that the level of financial fragility has surpassed the neutral level because of the credit, so this paper gives the suggestion that we need take step to reduce the possibility of a shock in the financial system.