Research On The Financial Stability Effect Of My Country’s Cross-border Capital Flow Management

With the development of the globalization of the world economy and the closer economic ties,the flow of cross-border capital between countries has become more and more frequent.Although cross-border capital flow is conducive to the optimal allocation of resources on a global scale,When the scale and speed of cross-border capital flows reach a certain level,it will threaten the financial stability of a country and even trigger a financial crisis.After many crises,countries and economies have learned lessons and began to pay attention to the management of cross-border capital flows.In the process of the gradual opening of my country’s capital account,cross-border capital flows have created enormous value for my country’s production and operation.At the same time,my country has also realized that the relaxation of access conditions has provided opportunities for capital’s profit-seeking behavior,especially short-term capital flows.It has brought unstable factors to the domestic market and foreign exchange market of my country and other countries,and financial risks and vulnerabilities have been accumulating,posing a threat to my country’s financial stability.During this process,my country gradually began to strengthen the management of cross-border capital.In addition to traditional capital controls,it also introduced macro-prudential management into the ma nagement framework.Therefore,in this context,it is necessary to deeply analyze whether cross-border capital flow management has financial stability effects,and to clarify its mechanism and dynamic characteristics to achieve financial stability.This paper first finds that cross-border capital flow management can promote financial stability through theoretical analysis,and there are two channels that make cross-border capital flow management have a positive impact on financial stability.Then,we calculated the intensity of my country’s cross-border capital flow management,and found that since 2000,the cross-border capital flow management intensity in my country has basically shown a gradual downward trend,except for the increase in 2008 due to the occurrence of the international financial crisis..On this basis,this paper constructs a TVP-VAR model to empirically test the relationship between cross-border capital flow management and financial stability.The research finds that: first,my country’s cross-border capital flow management can promote financial stability,and at the same time cross-border capital flow management can promote financial stability.Cross-border capital flow management can achieve financial stability through two channels: cross-border capital flow and exchange rate expectations,and the short-term impact is greater than the long-term impact;second:cross-border capital flow management,exchange rate expectations fluctuations,short-term cross-border capital flows and financial stability The four variables have time-varying characteristics and the relationship between the variables will have different degrees of influence in different periods.Third,the occurrence of the 2008 financial crisis and the Sino-US trade dispute have a great impact on my country’s financial stability.Finally,this paper puts forward policy suggestions for the realization of financial stability from four aspects: improving the macro-prudential management of cross-border capital flows,improving the monitoring and early warning of cross-border capital flows,stabilizing the RMB exchange rate expectations and steadily promoting the opening of the capital account.