The Impact Analysis Of Capital Account Liberalization On Financial Systemic Risk

With the deepening globalization,the linkage between the domestic economy and the international economy has been strengthened.After enjoying the rapid growth of international trade and rapid economic rise coming by the opening of the current account,the opening of the capital account of China gradually began.Capital account liberalization means that the international capital can get free access to flow in and out.It means the increase of the capacity of making the introduction of a country's international capital serve to the country's economic construction.However,the financial crisis in Southeast Asia always reminds us of the difficulties that may arise in the case of capital account opening.If the capital account is opened improperly,it will threaten a country's economic and financial security,deepen systemic risk,and even financial crisis.Therefore,this paper will study what kind of impact the gradual opening of the capital account may have on China's financial system trying to achieve capital account liberalization while maintaining financial security.At the same time,this paper tries to make some policy recommendations to maximize the benefits of reform and minimize risk.Based on relevant literature,this paper firstly summarizes the relevant theoretical backgrounds of capital account liberalization and financial systemic risk,and clarifies the scope of the study.On this basis,the paper describes the measurement of capital account openness and financial systemic risk.Based on this,comes some Empirical analysis.The empirical study first draws lessons from the control proportion of K-O index and the control strength of Quinn index,improves and constructs the comprehensive index which is more suitable to measure the opening degree of China's capital account,and finds the year data of China's capital account opening degree from1999 to 2014.In this date graph,this paper finds the turning point of capital account opening degree,and it is defined as the time node which contrasts before and after opening degree of capital account in this paper.Then,this paper selects GARCH model with the logarithmic rate of return of the banking and securities industry.The GARCH model is applied to the banking and securities industries,and the two industries of the banking industry and the securities industry are estimated.VaR series,the paper analyzes the actual changes of the systemic risk of the two industries after the opening of the capital account by comparing the characteristics of the VaR series before and after the comparison,so as to comprehensively analyze the impact of the capital account opening on the systemic risk of China's financial system.The empirical results show that the deepening of capital account opening has impact on both the banking industry and the securities market,which leads to the increase of the risk fluctuation.However,the fluctuation of the initial opening is not obvious.The risk fluctuation of the two industries is obviously strengthened on the long run,which proves that the deepening of the opening of the capital account does accelerate the overall improvement of the systemic risk of the financial system.From the industry perspective,compared to the banking industry,the degree of the risk increasing is more intense in securities industry.