The Research Of The Financial Risk Early-warning System Of China

Since the1970s, as finance has become more and more liberalized and globalized,the influence and frequency of financial crisis has obviously expensed. As an emergingcountry, China is integrating into global economic and financial system, and various kindsof financial risks and financial crisis are mutually transferring through the growinginternational economic trade between China and other global countries, influencing thestability of Chinese economy and finance. In order to prevent the outbreak of the financialcrisis and maintain the stability of financial system, it is necessary to build a Chinesefinancial early-warning system, which is based on the real situation.The article has systematically reviewed the modern theories of financial crisis andthe domestic and foreign financial risk early-warning models. And based on the domesticand international research results, the article has established a financial early-warningsystem, which is drawing from the real situation of Chinese financial risk andearly-warning system. The financial early-warning index system has four aspects,including macroeconomic risks, banking-system risks, other financial-institution risks andexternal risks, and twenty early-warning indexes. The article has comprehensively usedthe AHP method and entropy method to determine the weight of every index of thefinancial early-warning index system, and this is helpful to avoid the one-sidedness ofeach method, and employed early-warning signal system to display financial risk. Andthen, according to the Chinese financial risk indexes from l995to2011, the article hastested the accuracy and rationality of the financial early-warning system, and theempirical results showed that his system’s early-warning effect is credible. Finally, thearticle has made the prediction of the indexes and risks in2012and2013intwo-exponential-smoothing method, and given the corresponding risk-control measuresand suggestions, such as implementing a proactive fiscal policy and prudent monetarypolicy, strengthening the risk management of loans, perfecting the financial informationsystem, and so on.