An Empirical Study Of Financial Instability Hypothesis On Listed Companies

In the past more than a century, from Turkey, Uruguay, Argentina, Brazil and other countries’financial crisis to October2007the American subprime mortgage crisis, the financial crisis frequently outbreaks. These crises not only affect their homeland, they are also affect the whole world economy. At this point, we have to ask what giving birth to the "devil", is it the failure of policies on regulation, or the moral hazard in the bank system, or the instability characteristics of financial system? To answer this question, several generations of economic and financial experts have proposed several theories about financial crisis, including the financial instability hypothesis, the banks’runs, the mistakes on the monetary policy and so on.In this article, we have taken Minsky’s "financial instability hypothesis" as a theoretical basis to measure the operation of economy by the change of three type units in the real economy. Minsky believes that not only the capital, assets and labor, the debt finance also tie economy past, present and future, the place and the price of debt finance are determined by the expected of corporate profits. The corporate profit affects the obligation of debt finance and further to the state of the entire financial system. According to the above logical relationship, Minsky divided economic unit into three categories:Hedge unit, Speculative unit and Ponzi unit, and proposed the following hypothesis:if the Hedge unit is in a main role, economy is becoming more close to a spontaneous finding and keeping balance system. Conversely, if the Speculative unit is at a main role, the economy may be in non-equilibrium, spontaneously deviate from the equilibrium further. The economy has financing regimes under which it is stable, and financing regimes in which it is unstable; Second, over periods of prolonged prosperity, the economy transits from financial relations that make for a stale system to financial relations that make for an unstable system. That is over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and ponzi finance. Theoretical process can be described as follows:at a time of stable economy, investors usually consider the future economy environment is stable, this will encourage investors to take more risk, especially in leveraged investments, the longer stable economy growth, the faster the growth rate, the smaller the risk aversion of investors, and thus a more leveraged investment. Any event interrupted the chain of funds in the state of highly leveraged may lead to a vigorous financial crisis.Based on the above facts and theory, this article research the relationship of the real relationship and financial stability from1991which the Chinese modern stock market establish to2010on the basis of related conceptions is being defined and related theory is being reviewed and combined. In this process, we use the index of the rate of change of urban and rural savings deposits and bank loan rate of change of the index of non-governmental sectors to measure the stability of the banking system, the use of the robustness of the GDP deflator index rate of change of the index on the real economy measure, the use of monetary liquidity, financial deepening ratio, securitization rate, volatility of stock price index, the rate of economic development credit, total fixed asset investment growth rate and inflation rate of macroeconomic indicators on the macro-financial stability rating, the combination of the above the three time series vector derived measure of financial instability. On this basis, run the Logit model regression of macroeconomic indicators, each indicator regression results are not satisfactory, the use of financial instability indicators hedging unit of measurement of the real economy and Ponzi units Logit regression found that the regression effect is ideal. Through the above analysis, we verified the assumption of this article, hedging units accounted for in the real economy, the greater the proportion of the financing units, the more stable financial; the greater the proportion of Ponzi units, the more likely unstable.