Restraints On Negative Externalities Of Finance: From The Perspective Of Finainical Crisis

The Global Financial Crisis had led to great disasters to the economy all over the world. It was not only a crisis happed in the real world, but also a crisis in the financial development theories.This crisis had given us a clear view of market failure in the most developed country. It was mainly because of the apotheosis of financial liberalization. This dissertation had proved that government intervention must be indispensable because of NEF (Negative Externality of Finance). Government intervention, together with market self-fulfilling, formed the mechanism of the economy.By using the externality theories, the dissertation gave the definition of NEF. It analyzed the source and formation of NEF, and made the concept discrimination on NEF, financial risk, financial crisis and financial crisis contagion.In the research of the formation mechanisms of NEF, the dissertation divided them into two parts, the formation mechanisms in closed economy and the formation mechanisms in open economy. In the analysis of the closed economy, it gave a national view of formation mechanisms of NEF by using traditional theories, such as Keynes Effect, Wicksell Effect, Wealth Effect and Financial Accelerator Effect. In the analysis of the open economy, it discussed five aspects of NEF which could be found in contagion theories of financial crisis. And the dissertation also discussed the formation mechanisms of the three models of financial crisis one by one.In the study of restraints on NEF, the dissertation systematically summarized the direct and indirect costs of financial crisis, and proposed that government intervention, together with market self-fulfilling, formed the mechanism of the economy. It criticized the financial liberalization theories from the view of NEF, and made policies on the warning, management and salvation of financial crisis.In the empirical research of the global financial crisis, the dissertation proved that the main reason of the contagion of the Global Financial Crisis is dollar hegemony. It presented a simple model to deduce how the Sub-prime Crisis had been exported to the rest of the world based on dollar hegemony and shadow banking by using the methodology of "Optimal Currency Crisis" developed by Allen and Gale (2007). The model had shown the financial contagion of the sub-prime crisis, and revealed the secrets of how the U.S. had transferred risks and crisis to the rest of the world. Hence, U.S. should take more responsibilities for the Global Financial Crisis.In the last part, the dissertation revealed that it was contributed to separate supervision, capital account control and government intervention that China had resisted form Asian Financial Crisis and Global Financial Crisis. And the dissertation offered the main proposals of China's restraint policies on NEF in the coming financial reform.