Financial Crisis, The Credit Mechanism

The world financial crisis of 2008 has aroused people's closer attention and more research to this economic phenomenon. In the related domestic and foreign documents and arguments, many people mentioned "financial crisis is credit crisis", but they have merely given the simple affirmation regarding the relations between "financial crisis" and "credit crisis" instead of a detailed theory discussion and explanation.The people must be wandering:Why is financial crisis credit crisis? How does credit crisis happen? Which kind of relationship is between financial crisis and the credit within it? When governing the financial crisis, how should people take advantage of the credit in financial crisis in order to prevent and deal with the crisis? Neither the Marx model's crisis theory nor crisis theory in the Western Economics can give a very good explanation to it.The root of the problem lies in the insufficient realization of credit and its mechanism. The credit researches in Western Economics are mainly based on institutional analysis, the transaction cost theory and the game theory, therefore, their focuses of credit research are mainly on the external factors related to credit behavior, such as the rules, the systems, the organizations, the laws, the cultural customs, the environment and so on. That is, in these theories, "credit" becomes a "black box" that can not be opened. While although credit theory is an important component in Marx's theory, it is actually not the key research point, therefore no systemic thorough understanding is formed.Starting with the credit concept, this dissertation first summarizes the existing problems in the credit concept recognizing, then opens "the black box" of credit in the economics by taking the related sociological theories, and re-defines the credit concept. In this re-definition, credit is composed of two factors:trust and trust utility. Simply speaking, credit is the utility of trust.Based on the re-definition of credit, this dissertation further explores the internal properties of credit (namely the subject-interactive characteristic, the relational characteristic, the desire-based characteristic and information-reactive characteristic) and the credit mechanism, and also discusses the relations among credit, its mechanism and finance and financial crisis, thus the credit theory is enriched and improved.Based on the improved credit theory, along with the clues of the operating mechanism of credit and its internal characteristics, this dissertation analyses the credit mechanisms in financial crisis eruption, contagion and receding.The main methods in the research included three levels:First, at the epistemology level, this dissertation insists on practical dialectics; Second, at the fundamental method level, this dissertation insists on the "systematic abstract method", namely starting from the reality, through holding the particular materials, conducts a dialectically unifying empirical and abstract study, and finally discover the essence by elaborating core concepts; Third, at the specific methods level, this dissertation insists on the application of comparison, classification, induction, analysis, synthesis, deduction, graph, data and model, as well as the method of combining individual and general analysis, and so on. In addition, this dissertation has introduced some research methods using in sociology and the Western Economic.The main innovations in this dissertation include:First, it proposes the new topic of "the credit mechanisms in financial crisis", thus establishes an analysis frame which combines the study of financial crisis and that of credit; Second, it proposes a new explanation of the credit concept, and on the improved credit theory, it conducts a brand-new systematic study of the phenomena and problems in financial crisis, and systematically demonstrated the viewpoint of "financial crisis is credit crisis", therefore constructs the complete theoretic frame of "the credit mechanisms in financial crisis"; Third, on the basis of the operating theory of credit mechanism in financial crisis, it proposes both preventing and reacting strategies in financial crisis governing; and considering the peculiarity of China, some specific suggestions are proposed in terms of governing financial crises in China. The major conclusions in this dissertation include:First, the process of financial crisis is the result of evolving process of credit expansion, credit boom, credit contraction and credit crunch. The key links in this process are credit inflation and credit deflation. Therefore, simply speaking, the explosion of financial crisis is the credit crunch after credit boom. Second, the international contagion of financial crisis is in nature that of credit crunch. This kind of contagion is realized through four main credit channels:The subject-interactive contagion, the relational contagion, the desire-based contagion and information-reactive contagion. Third, financial crisis receding is substantially the result evolved out of the conflict between the zero limit of credit crunch and the finite contraction of credit substance base. Financial crisis receding is mainly realized through three credit channels:withdrawal of credit subject, self-repair of credit subject and external succor to credit subject. Furthermore, four credit effects caused in financial crisis receding are: credit system re-construction, wealth shifting, "wealth vanishing", and the re-distribution of income. Fourth, the principle of governing financial crisis should be "ironing the credit fluctuation", and specifically, the preventing strategy should be to prevent the credit inflation as far as possible, while in reacting financial crisis the principle of "contract those that should be contracted, rescue those that should be rescued" should be insisted on. And the governance of Chinese financial crisis must mainly rely on the superiority of socialist system to avoid the credit inflation and the credit crunch contraction.