The Impact Of Trade Friction Events On The Risk Contagion Path Of China’s Financial Network

The rapid development of financial internationalization and financial innovation has made international financial business and institutions increasingly closer.So the entire financial system presents a complex network,which is easy to generate systemic risks.In order to prevent systemic risks,the state has introduced a number of measures to clear up risk points and guide the healthy development of financial markets,which have achieved good results.However,since the second half of 2017,trade frictions between China and the United States have been continuous.Up to now,it has gone through 12 rounds of negotiations and four truces,and the target of tariffs has been extended to all 550 billion us dollars,which has damaged the trade market and deepened the accumulation of risks in the financial market.To identify the transmission path of trade friction risks in the financial network is of great practical significance for preventing and controlling systemic risks,improving the crisis management system and reducing losses.After reviewing relevant literature on financial risk contagion,this thesis proposes a construction method of complex network based on DCC-GARCH model.Firstly,the data of stock,bond,foreign exchange,currency and commodity markets from the beginning of chinaus trade friction to the present are selected as empirical samples to construct the risk contagion network of China’s financial market,so as to study the correlation among Chinese financial institutions in the context of trade friction,and identify the key financial institutions and the shortest path of risk contagion.After Identify the signature friction events that occurred during the sample,use the event analysis method to verify the role of the friction event in the risk contagion path.The empirical results show that China’s financial network conforms to the characteristics of the small world network during the trade friction,and financial risks spread quickly.The stock market and the commodity market are key nodes in the network,especially the importance of the commodity market has increased compared with the past.The friction events have a significant impact on the stock market,foreign exchange market and commodity markets.In the shortest path of risk contagion,the friction events have a significant impact on risk contagion between markets and have no effect on risk contagion between different sectors of the same market.The friction events strengthened the risk contagion between the stock market and the commodity market,the foreign exchange market and the gold market,the commodity market and the bond market.And they weakened the risk contagion between the commodity market and the gold market.The research results provide theoretical and practical basis for the regulatory authorities to strengthen macro-prudential supervision of financial markets,clarify the focus of supervision and build a financial risk governance framework.