Liquidity Shocks And National Financial Security:Research On The Influence Mechanism And Its Countermeasures

Finance is the core of the modern economy,and financial security is an important part of national security.Therefore,changes in liquidity have a profound impact in financial security.In the wake of financial crisis in the 1990 s,financial security had the international community really concerned.A review of economic development in recent decades shows that many financial crises are accompanied by unusual liquidity shocks around the globe.The world today is marked by changes unseen in a century;China is exposed to increasing external shocks.It is necessary to examine the challenges from liquidity shock and put forward preventive countermeasures,which aims to ensure financial safety and to bring about the great rejuvenation of the Chinese nation.Based on the effects of liquidity shock on national financial security,the thesis defines liquidity shock and national financial security based on existing research,and analyzes the formation mechanism,influence channel and effect category of liquidity shock.The work above lays the foundations for subsequent empirical research.Firstly,the TVP-FAVAR method is applied to index the national financial security,64 variables are selected from 7 dimensions to construct the variable pool of financial security indicators,followed by a comparative analysis between the gross and subdivision national financial security index,and a loading factor analysis.Then,the TVP-SV-VAR model is employed to study the impact of liquidity shock bubble effect and price effect on national financial security,as well as the impact of bubble effect on price effect,using the impulse response function of equal time interval and specific time point.The analysis focuses on three milestones: the international financial crisis in 2008,the money shortage in 2016,and the global epidemic in 2020.The thesis shows that:(1)The switch between surplus and deficiency of liquidity shows obvious cyclical characteristics.(2)The bubble effect and price effect of liquidity shock have a time-varying impact on national financial security,respectively.Also,the bubble effect of liquidity shock has a time-varying effect on the price effect.(3)China’s financial security is facing multiple challenges from liquidity shocks,and it is necessary to take strong preventive measures.Based on the research above,it is proposed to raise awareness that liquidity shock has great impact on national financial security,build a generic response system when liquidity shock hits,and strengthen the scientific and technological capabilities.The measures are aimed to effectively prevent liquidity shock,keep the bottom line of preventing systemic financial risks,and ensure China’s financial security.