Early Warning Of Financial System Basing On Efficacy Coefficient Method

The financial industry is a high-risk area, and the competition is very intense. From thecurrent point of view, China is in-depth reform of the financial markets, the development of animportant stage in the financial general rules. With the opening up of China’s financial markets,domestic and international financial markets are further strengthening the interaction betweenthe financial system and the uncertainty of financial system has cropped up. Thus it isparticularly important that we should prevent and solve financial markets crisis in advance andmaintain the stability of the entire financial system.This paper introduces the efficacy coefficient method to establish the financial systemfinancial early warning system and it aims to provide a comprehensive, systematic earlywarning program and assist financial institutions to create custom early warning mechanism. Itsmain innovation is that the efficiency coefficient method is introduced into the financial earlywarning model of financial system. with referring to the numerous warning theories and modelsfor early warning and with the factor analysis method to determine the value of early warningindicators weights, this paper collates key financial indicators that various enterprises of thefinancial system,statistics, modeling, and comprehensively considers the financial crisis, whichplay a forecast of development of financial enterprises’ strategy guiding role. This model caneffectively identify crises, prevent risks, which reduces the possibility of financial crisis that thefuture may face to a minimum level.Firstly, this paper introduce the financial system efficacy coefficient method to establishearly warning model of financial research background, significance and the main content of thispaper and structure, and financial distress elaborate study abroad status.Secondly, I descript the financial system warning system index system and weightdetermination rule (factor analysis). This paper selects representative banking, securities,insurance and other financial sectors index system and uses the financial system efficacycoefficient method to establish the financial early warning model.Thirdly, it will verify the efficacy coefficient method to establish the financial system ofcomprehensive evaluation of the financial early warning model accuracy of the results.Finally, for the financial system’s financial early warning work I propose r and drawefficacy coefficient method in this paper and introduce Forecasting Model of the financialsystem effectiveness conclusions.