Vulnerability Diagnosis Based On Fuzzy Maximum Entropy-based Financial System

With the speed of our country’s financial liberalization and financial globalization deepening, the frequency of financial crisis is increasing. Our local economy and the global economy had a lot of serious losses. The stability of the financial system has been paid attention to a lot of people.The financial fragility comes from a book named "Financial Instability Hypothesis" which Minsky published in1982. After30years of development, it has formed a relatively complete theoretical system and mature regulatory framework in academia and practitioners. Financial fragility study is mainly based on index system, and arithmetic average of the composite index method for measuring the financial fragility, that the actual effect of such method has not objective enough and it’s the lack of comparable.Based on the above facts, with in-depth discussion we intend to set up financial fragility index system, which could give a reasonable and effective divided of indicators. We also give a financial fragility model which can make full use of the information of every index. Empirical analysis shows that this design of financial fragility index system and method are more reliable and objective than the previous system and method.Firstly, combined with the previous research and the features of China’s financial system, we set up a new financial fragility index system which is according to the development of Chinese economic. And then using the maximum entropy principle we establish an evaluation model. Using lagrangian method to solve this model, we get the optimal degree of membership matrix. This method takes into account the financial fragility of intermediary transitional between all levels, rather than simply give only the level of the result. The arithmetic average comprehensive index method cannot be achieved.Secondly, using2002-2012relevant economic datas, we verify the validity of the model. With such data and our new model, we get the optimal membership matrix of financial system fragility between2002-2012. The empirical results show that our financial fragility model presented in this paper is more reliable and effective than the existing model.In addition, we directly get some reason of Chinese financial vulnerability by analyzing the empirical. This is the previous model cannot show.