Research On The Financial Institutions Of The Foreign Exchange Risk Exposure And Influence Factors

With the deepening of China's exchange rate reform and the increasing frequency and range of exchange rate fluctuation,the uncertainty of the exchange rate trend gradually increases and brings exchange rate risk to foreign-related assets of financial institutions.On July 21,2005,the People's Bank of China(PBOC)announced the implementation of exchange rate system reform.The RMB is no longer solely pegged to the US dollar.It implements a market-based floating exchange rate system with reference to a basket of currencies.By the end of 2014,the RMB exchange rate has been increasing,and the nominal effective exchange rate and the real effective exchange rate have appreciated by 40.51% and 51.04% respectively.In August 11,2015,the People's Bank of China announced on improving the RMB exchange rate against the US dollar price of the middle price statement and market makers in the daily interbank foreign exchange market before the opening.The reference to the previous day interbank foreign exchange market closing exchange rates and taking into account foreign exchange supply and demand as well as major international currency exchange rate changes to the China Foreign Exchange Trading Center to provide the middle price quotations.As of December 31,2015,the RMB against the US dollar fell 4.5% and it is the largest annual decline.In addition,the RMB exchange rate fluctuates by 0.3% from the inter-bank RMB / USD exchange rate in 1994,and the RMB / USD exchange rate fluctuates by 2% in the inter-bank spot foreign exchange market in 2014.The RMB exchange rate For two-way fluctuations,and the exchange rate volatility.With the strengthening of economic globalization,the integration of national economy and the world economy.The foreign exchange of the economy has increased,and the foreign-related assets of financial institutions have been increasing.Therefore,the exchange rate risk has become an important risk that financial institutions can not neglect and managing foreign exchange risk is very important.But for a long time,the Chinese micro-subject has no experience in the management of foreign exchange risk and the related research also lags behind because of the RMB exchange rate has been relatively stable before 2005,Based on this consideration,this paper analyzes the current situation of foreign exchange risk exposure of financial institutions in China by using the methods of theoretical analysis and empirical analysis based on the current research of domestic and foreign scholars.And Foreign exchange risk impact path for the theoretical background of the impact of China's financial institutions exposure to foreign exchange risk factors analysis based on the foreign exchange risk of financial institutions.In view of the representation of the sample and the availability of data,this paper chooses the panel data of 34 listed financial institutions after the exchange rate reform,and uses the classic market model and Logit model in the capital market method to test the exposure of foreign exchange risk of listed financial institutions factors related to the situation.The study found that the overall exposure of foreign exchange risk of financial institutions is significant among which financial institutions have the most exposure to foreign exchange risk of the US dollar.The exposure of foreign exchange risk in different industries is quite different.The overall foreign exchange exposure of the trust industry and the securities industry is higher than that of the banking industry and the insurance industry.In the case of lagging,the most significant exposures to foreign exchange risk are the lagged four periods.The empirical results show that the double-listing effect,the liquidity ratio,the average total assets return ratio and the asset-liability ratio have significant influence on the foreign exchange exposure of financial institutions.Therefore,the financial institutions in the pursuit of scale expansion and we should attach importance to the comprehensive ability to enhance,improve the capital structure,improve profitability and solvency,risk prevention.At the same time,it is necessary to improve the level of sophistication and specialization of liquidity management,reasonably match the structure of assets and liabilities and enhance the ability of commercial banks and the whole financial institutions to cope with risks.