The Study Of Impact Of International Short-term Capital Flows On Financial Security In China

Globalization of finance has been accelerating since 1990. At the same time, emerging and deteriorating of economic crises resulted in developed countries such as America, Japan and Europe. They started to look for investment area opportunities which could maintain or increase capital value. Much international short-term capital poured into developing countries which were promoting market-oriented economy, and the scale of the international short-term capital flows enlarged rapidly. Though this trend could facilitate capital-inflow countries more prosperous and well-developed to some extent, it would bring unprecedented uncertainty and threat to financial security. It becomes a demanding issue about how to supervise international short-term capital flows and respond to financial security influence effected by above situation. Therefore, this thesis focuses on the study of impact of international short-term capital flows on financial security in China, which has theoretical and practical meaning.This thesis summarizes related research literature of international short-term capital flows and national financial security situation at home and abroad. And it emphasizes on analyzing and estimating the scale of international short-term capital flows. On the side of theoretical analysis, this thesis analyzes the impact of international short-term capital flows on financial security in China by using financial security indicators such as money supply, inflation rate and actual rate. On the side of empirical analysis, through conducting Unit Root Test, Johansen Co-integration Test and Granger Causality Test, it compares with financial security impact resulted from international short-term capital flows during the two different periods (1990-2001 and 2002-2013) and comes to a conclusion:the influence of net outflow of international short-term capital flows is worse than that of bi-directional flows for financial security. Based on that, from the aspect of restricting net outflow, this thesis comes up with suggestions about how to supervise the international short-term capital flows.