Research On Financial Fragility In Emerging Markets

This essay mainly discusses why financial fragility is more serious in emerging markets, around which discussion will be developed in the microeconomic, macroeconomic and open-economic aspects. The essay consists of eight chapters.Chapter One is the part of introduction.Chapter Two is the literature review of financial fragility. Firstly, as the logical beginning, the general theory of financial fragility is reviewed. Secondly, as the basis of the essay, the analysis of the more seriousness of financial fragility in emerging markets is reviewed. Thirdly, from the perspective of balance sheet, the analysis of financial fragility is reviewed.Chapter Three is the analysis of financial fragility from the micro-perspective. The research method of balance sheet is used to analyze maturity mismatches and currency mismatches of banks and enterprises in emerging markets. Emerging markets are bank orientation of financial system, so bank fragility is the key of financial fragility. First, maturity mismatches and currency mismatches of banks are analyzed. Then, based on the relationship of credit chain between banks and enterprises, the intensification of bank fragility caused by maturity mismatches and currency mismatches of enterprises are analyzed. Finally, researches are done into the cause of emergency and deterioration of maturity mismatches and currency mismatches in emerging markets.Chapter Four is the analysis of financial fragility from the macro-perspective. The deteriorating effects of asset bubbles on financial fragility and the challenges to monetary policy are mainly discussed. First of all, the relationship between asset price and macroeconomic fluctuation and the influences of asset price on consumption demand and investment demand are illustrated. After that, taking Thailand for example, the author analyzes the roles of credit expansion in the asset bubbles and the influential mechanism of asset bubbles on financial fragility. Finally, the choices of monetary policy facing asset bubbles are analyzed.Chapter Five is the analysis of financial fragility from the open perspective. Firstly, how financial globalization intensifies financial fragility in emerging markets is discussed. Secondly, how the turbulent international monetary system intensifies financial fragility in emerging markets is discussed. Thirdly, the author discusses the mechanism of financial fragility accumulation when the pegged exchange rate regime is adopted. Fourthly, how the capital flowing to emerging markets intensifies financial fragility is discussed. Fifthly, the author discusses financial contagion internationally.Chapter Six is warning systems for financial fragility in emerging markets. Firstly, the study on warning systems for financial fragility is reviewed. Secondly, the warning systems for financial fragility in emerging markets are designed, and the warning systems are applied, taking Thailand and Korea for example.Chapter Seven is the governing of financial fragility in emerging markets. How to strengthen financial system stability and enhance international cooperation in finance is analyzed.Chapter Eight is the research of financial fragility in China. Firstly, the author divides the history of Chinese financial reformation into three phrases, and analyzes the characteristics of financial fragility in each phrase. Secondly, the author discusses financial fragility in the contemporary era, and puts forward the opinions that the imbalance of financial structure and the imbalance of payment are the factors of financial fragility.