An Empirical Study Of Banking Fragility In China Based On VAR Model

In the financial field, the banking system's position should not be underestimated. Compared with other industries, the banking industry is more prone to risk, the primary cause lies in its inherent vulnerability. Once accumulated to a certain extent, it will lead to the outbreak of the bank as well as the financial and economic crisis. Therefore, the vulnerability of the banking system and its influencing factors has been an important issue.Firstly, this paper describes the background, purpose and significance of the research, and then by reading the latest research results and related theories of the banking system fragility, it analyzes the advantages and disadvantages of existing research. Secondly, summarize the theoretical basis of the banking system fragility. Then draw lessons from the domestic and foreign research on the vulnerability index system, summarize the main influencing factors of China's banking system vulnerability, determine the evaluation index system. Through constructing of the virtual beta coefficient on behalf of the bank's vulnerability and the Var model, it is used to demonstrate the relationship between the fragility and its contributing factors, and finally deduce the seasonal tendency of the fragility of our banking system.The results show that the fragility of the banking system is the result of the macro economic situation and the internal factors. Different economic variables have different time effects on the banking system vulnerability. Under different economic conditions, the appropriate adjustment of the corresponding variables can improve the banking fragility.Finally, combined with the empirical analysis and the specific facts of the development of China's banking system, we give some suggestions from the macro economic environment, the banking system and the bank.