Research On Financial Risk Early Warning Of Jiangsu Province Domain

Under the background of three periods superimposed, making sure not happen regional and systemic risk is a great test and challenge. So how to effectively prevent and dissolve the regional financial risks has become the focus of the research field. So-called regional financial risk is uncertainty or possibility of regional financial activity suffering losses, which is to reflect regional overall financial risk level. It’s mainly rooted in the uncertainty of regional economic, financial, social areas, and it has the characteristics of strong complexity, sudden, conductive and measurable.In theory, this article firstly combing domestic and foreign literatures about the indicators, models and regional financial risk early warning. Secondly, in order to provide theoretical guidance for the following empirical analysis, the cause theory of regional financial risk early warning, source and transmission path were analyzed in this paper. In empirical aspect the paper has two main parts: the first part is the design of regional financial risk early warning, this part is mainly to build the regional financial risk early warning index system, and determine the interval and threshold value. The second part is based on the data of Jiangsu province for empirical testing, giving weights of index system by using the entropy weight method, analyzing for regional financial risks early warning based on the fuzzy comprehensive evaluation method, and also to evaluate the performance of early warning followed by Noise signal ratio method. Last to empirical test the regional financial risk early warning out of sample period and short-term forecast for future financial risk situation.The results are that: in the aspect of early warning analysis, the running situation of Jiangsu province’s financial risks has three stages. Respectively is deteriorating stage in 2005-2009, outbreak stage in 2008-2009 and falling stage in 2010-2014. Among, close to or more than alert mainly from 2008 to 2010, happens to be the global financial crisis period. In the aspect of early warning’s performance, and in the future, Jiangsu Province domain have upward pressure on the financial risk. The performance of early warning is that under the optimal threshold of 50% the correct signal probability can reach 80%, and the error signal probability is low, thus the model of early warning is better.Further analysis found that regional financial risk mainly comes from the economy and the financial sector. And the macroeconomic development undergoing overheating and inflation, accompanied by the micro financial credit and investment surge, risk accumulation to appearing progressively, thus financial risk is volatile. Recently, the transformation and upgrading of economy enters a critical period, economic growth is slowing, coupled with the early stage of the transition of credit expansion has accumulated risks, which are gradually exposed. Therefore potential financial risks pressure in Jiangsu province is bigger. Hence, keeping the bottom line of no happens regional financial risks is to deepen the reform of the economic and financial, to improve the regional financial risk early warning ability, to strengthen the micro-prudential supervision, to improve the effectiveness of macroeconomic regulation and control, and to improve bank’s internal control system.