The Empirical Analysis Of The Extent And Causes Of Vulnerability Of China's Banking System

In the global financial liberalization and integration movement, the finance system of China has changed dramatically, and has made great achievement. As the financial market is opened gradually, foreign capital will enter our country by different ways. It not only takes chances but also challenges to the development of our finance and bank system.As a member of WTO, China will relax financial regulations of our country's capital account. But the financial crisis of Asia in 1997, we have seen the consequences of opening financial market too early.And now many famous foreign banks has entered our banking system, including HSBC, CITI', Standard Chartered bank, etc. They'll be strong competitors of local banks.These yeas, especially last year, our economy are overheating, the inflation rate is very high, and Investment increases fast, the stock market fluctuate fiercely.The banking system has inherent weaknesses, because of its character of high liabilities. And the banking system of our country has some problems, such as high unhealthy loan rate, low capital surplus and so on.So it's necessary to study the fragility of our banking system now.We use both qualitative and quantitative methods to study the fragility of our banking system. Using the CMAXt methods of three core indexes and other two qualitative methods to estimate the condition of China's banking system, and finding there're three years that the banking system is fragile between 1991 and 2007.Then we research the relationship between the fragility of banking and three kinds of economic indexes, Including the financial indexes, macro-economic indexes and financial opening indexes.Finally, according to the results of this paper, we give several advices of how to solve the problems and improve the efficiency of our banking system.