Research On Financial Stability Of BRIC Countries

Financial instability will trigger a financial crisis when it is accumulated to a certain degree,while emerging markets are not only an important growth point of economic development of the world,but also hit hard by financial crises.To avoid the happening of financial crisis,it is crucial to study financial stability in emerging markets.This paper take the four BRIC countries(China,Russia,India,Brazil)as empirical examples to study financial market stability in emerging countries,focus on the research of the impact by systemic shock over time especially in extreme market conditions.So far,whether domestic or foreign,academic or practical circles,have not yet given a consistent definition of "financial stability".On the basis of the existing research,this paper,from the perspective of daily rate of return,studies the impact by systemic shock to the financial stability of BRIC countries over time,especially under extreme market conditions.In contrast to the research methods of traditional financial stability,this paper does not study the instability of financial market by constructing financial vulnerability index,but from the quantitative point of view,using the quantile regression model to examine the impact of systemic shocks to financial stability of BRIC countries,under normal and extreme markets.The empirical results show that the BRIC countries have some degree of financial instability.China and Brazil have the most obvious performance.In addition,this article for the first time adopt the variable coefficient quantile regression into the financial stability study.The market is always a changing market,so the dynamic relationship between financial markets and systemic shocks is very helpful for us to observe the impact of systemic shocks on various financial markets from a more microscopic perspective.The regression of the variable coefficient can not only find out the stability of the financial market or not,but also describe the trend of the impact of the systemic impact on the stability of the financial market over time.The empirical results show that the impact of systemic shock on financial markets in various BRIC countries is changing over time,especially in extreme market conditions.Also the results show that,the impact of systemic shocks in the extreme market conditions have been amplified.And the more extreme the market condition is,the more intense of amplification effect is.