A Study On The Mechanism Of Risk Contagion And Regulatory Policy:An Informal Financial Network Approach

As one of the critical engines of China's economic growth,private enterprises have played an important role in economic development.However,in the fluctuations of the current macro-economy,small and medium-sized private enterprises are unable to obtain the funds needed for development from formal financial institutions such as banks due to the uncertainty of their management.This contradiction is both an opportunity and a challenge for China's informal financial.The informal finance provide new ideas to this contradiction.However,it should be noted that the operation activities of most private financial institutions are in the gray area of the regulatory system,which leads to the disorderly development of some regional private financial institutions.Eventually,it will bring uncertainty to the local social and economic system development.Therefore,it is of significant theoretical and practical value to investigate the mechanism of risk contagion and regulatory policy of China's private finance.Therefore,it is of significant value to investigate the mechanism of risk contagion and regulatory policy.We define the concept of private finance based on the previous results of related studies.Then the implementation basis and risk generation mechanism of private finance are sorted out,and related literature on financial risk contagion under the complex network theory and the relevant research results on China's private financial supervision are reviewed.We study the theoretical basis and method of informal financial risk modeling,including the introduction of the classification,features and problems of China's private finance,and the complex network theory.We introducing the advantages and features of complex network theory methods in the study of complex network systems and the application scope of different infectious disease models in the field of financial risk contagion.What's more,the propagation dynamics model SEIR is introduced into the private financial network with small world features,and the influencing factors of government regulation is considered in the model.By constructing an individual conversion probability model under the private financial risk contagion,the risk contagion mechanism in the private financial network and the intervention strategy of the regulatory department are discussed.In the simulation experiment of private financial risk contagion,this study uses the data of the national microfinance companies published by the People's Bank of China in 2014~2018 to construct a regional private financial network with small world features,and conduct 4 numerical simulation experiments on risk contagion and regulatory intervention strategies based on the WS small world network model.The simulation's results show that the regulatory policy can decreases the effect of risk;An enhanced regulatory can decrease the proportion of infective nodes;Compared to the random immunization and regular immunization,targeted immunization has better efforts;The lagging of supervision prolongs the convergence time of infective nodes and effects of informal financial risk.