Study On The Impact Of Short-term Cross-border Capital Flows On Bank Systemic Risk

Since the Reform and opening-up,China’s financial market has beenincreasingly open to the outside world and closely connected with the globalfinancial market.Correspondingly,the impact of short-term cross-bordercapital flows on our financial market is also gradually increasing.Short-termcross-border capital flows can inject impetus into the high-qualitydevelopment of Chinese economy,at the same time,they also affect assetprice and exchange rate,and the stability of the capital market.With theincrease of the scale of short-term cross-border capital flows,the difficulty ofrisk management caused by them is also escalating.Due to the spillover effectof financial risks,if the risk management is not in place,it will affect thestability of our financial system and even threaten the steady development ofthe real economy.Commercial banks assume the function of creditintermediary through their own deposit,loan,exchange and savings business,which shoulders the functions of social payment,debt and credit creation,andis an important component of the national monetary policy transmissionmechanism.As an important and critical component of the financial system,commercial banks inevitably face huge capital flows and the huge impact itbrings,resulting in hidden risks.The stability of commercial banks plays avery important role in the stability of the whole financial system and thestability of the macro economy.As a result,it is very important to deeplyanalyze the transmission mechanism of short-term cross-border capital flowson the systemic risks of banks and how to take effective preventive measuresagainst them.Taking this as the research goal,this paper first sorted out short-termcross-border capital flows,systemic risk of banks and related literature ontheir relationship,then analyzed relevant theoretical basis and elaborated thetransmission mechanism of the impact of short-term cross-border capitalflows on systemic risk of banks: Short-term cross-border capital flows will lead to fluctuations in asset prices and real exchange rates,and then have animpact on the systemic risk of banks through asset prices and real exchangerates,that is,asset prices and real exchange rates have an intermediary effectin the process of the impact of short-term cross-border capital flows on thesystemic risk of banks.This paper further uses bank data from 2012 to 2021 for empirical analysis,and finds that: first,the increase of short-term cross-border capital flows will significantly increase the systemic risk of banks;Second,the increase of short-term cross-border capital flows will increase thesystemic risk of banks by raising stock prices and real estate prices.Third,anincrease in short-term cross-border capital flows would put upward pressureon the real exchange rate,thereby increasing the level of systemic risk forbanks.On the basis of theoretical analysis and empirical test,this paper putsforward some relevant suggestions,such as steadily implementing theopening-up and system reform of the financial industry,improving the short-term cross-border capital management system and improving the anti-riskability of banks,which have certain reference significance for China toactively cope with the impact of short-term cross-border capital flow on thebanking industry,prevent and resolve the systemic risks of banks caused by it,and stabilize the financial market.