Research On The Impact Of Short-term Cross-border Capital Flow On The Risk-taking Of Chinese Banks

Today,China's financial liberalization up has begun to enter a new stage,and the cross-border flow of financial elements has become more free and fast.Among the financial elements,the scale and frequency of cross-border capital flows have continued to rise,and their impact on the macroeconomic and financial systems has become increasingly profound.At present,China's banking sector still occupies the core position of the financial system.And With the continuous improvement of the marketization and business diversification level of China's banking industry,domestic banks' profit-seeking goals and behaviors have become more complicated,and the role of risk identification,measurement,and perception in the bank's asset portfolio and pricing has become increasingly stronger.Based on this,the impact of bank risk-taking behavior on banks' overall risk level and financial stability is becoming increasingly important.However,the short-term cross-border capital with high speculation and liquidity is closely related to the financial market and bank assets and liabilities business,which is more likely to have an impact on the bank's business activities and on financial stability.In the complex and severe economic environment at home and abroad,it is of great theoretical value and practical significance to explore the impact of short-term cross-border capital on bank risk-taking under the open conditions on controlling the pace of financial liberalization reasonably,improving the cross-border capital flow management framework and maintaining the stability of the whole financial system and the real economy.Combined with the research background,on the basis of relevant literature,this study first expounds the mechanism of short-term cross-border capital flow's impact on bank risk-taking,and holds that under the main multiple arbitrage motivations that is induced by exchange-rate-spreads,interest-rate-spreads,and asset-return-spreads,short-term cross-border capital flow can have an impact on bank risk-taking through the changes of exchange rate,interest rate and asset price,and its impact effect can be divided into "Exogenous Effect" and "Amplification Effect".Under the arbitragemotivations of exchange-rate-spreads andinterest-rate-spreads,the impact is mainly "Exogenous Effect",and under the arbitrage motivations of asset-return-spreads,the impact is mainly "Amplification Effect";Secondly,on the basis of summarizing the past measurement methods of short-term cross-border capital flow and bank risk-taking,this paper calculates and analyzes the situation of short-term cross-border capital flow and bank risk-taking in China.Then this study empirically tests the impact of short-term cross-border capital flows on bank risk-taking under different motivations,empirical results show that short-term cross-border capital inflow can increase the risk-taking of Chinese banks mainly through the appreciation of RMB and the interaction with house prices,while the transmission channels of interest rate and stock price are not obvious.The impact of short-term cross-border capital flows on bank risk-taking has a threshold effect on the liberalization of capital account.When the capital account is opened to a higher degree,the risk-taking of short-term capital flows increases significantly.Exchange rate marketization reform and macro-prudential policy play a regulatory role in the impact of short-term cross-border capital flows on bank risk-taking.The promotion of exchange rate marketization reform and macro-prudential policy can weaken the increasing role of short-term cross-border capital flows on bank risk-taking.Finally,according to the research results,this paper puts forward countermeasures and suggestions from prudently promoting the liberalization of capital account,improving the flexibility of RMB exchange rate,deepening the reform of financial market and optimizing the management framework of cross-border capital flows.The innovation of this research lies in the fact that on the basis of few literatures exploring cross-border capital flows on bank risk-taking,this research studies the impact of short-term cross-border capital flows on bank risk-taking and analyzes its impact mechanism in depth,and empirically tests its impact,which enriches the the theoretical research of bank risk-taking to a certain extent.In addition,this study combines the policies of China's capital account liberalization,exchange rate marketization,and macro-prudential supervision with the "risk-taking channels" of short-term cross-border capital,and explores the role of these policies in the entire short-term cross-border capital transmission channel,and make targeted policy recommendations accordingly.