The Assessment Of China’s Financial Stability And Its Impact Of The Microeconomic

Financial sector stability is related to the political, economic and social stability. Thefrequently outbreak the financial crisis, especially the U.S.subprime mortgage crisis is severeto the impact of the global financial markets, financial stability issues once again on theattention of the world. IMF evaluated the China’s financial stability for the first time in June2011, stressed that the Chinese government needs to strengthen financial stability assessmentsystem as soon as possible. The study of China’s financial stability assessment focused onqualitative analysis at present, the quantitative study use bank or financial vulnerability indexas the agency variables of financial stability from different sides to evaluate stability, there isno overall assessment of our financial stability. At the same time, all the financial system arerelated in the process of global integration. Therefore, this paper by developing an aggregatestability index for the Chinese financial system, including the world economic climate indexand other related world economic indicators to evaluate our financial stability.This paper first on the basis of related research results from home and abroad, selected16indicators to build aggregate financial stability index, including development, vulnerability,soundness and world economic climate index, and use of factor analysis and the weightedaverage method to calculate our financial stability index. The measure results of aggregatefinancial stability index show that: in the quarter of2004to2012, the overall financial systemin China is relatively stable, did not appear volatility phenomenon. The stable value weakestperiod is the fourth quarter of2008, in addition to the fourth quarter of2005and2011. So theconclusion in this paper is that the fourth quarter of2005,2008and2011are China’s financialstability situation not stable period, and in the case of declining world economic climate index,the stability of China’s financial industry is the trend of decline.According to measurement of aggregate financial stability index, this paper by usingVAR impulse response analysis and Granger causality test study the influence of China’sfinancial stability and macroeconomic. VAR pulse response curve results showed that theimpact of the macro economic variables fluctuation on the financial stability were disappearedas time goes by. But financial stability suffer a unit of the positive impact, namely theimprovement of the financial stability has a positive impact on macroeconomic. Grangercausality test further proved the financial stability and macroeconomic volatility are causalrelationship. At last, according to the world economic climate index declining, put forward thecorresponding measures to safeguard the financial stability to prevent international economicand environmental deterioration on the adverse effects of China’s financial industry.