Research On Financial Stability From The Perspective Of Financial Structure

The world has witnessed China's rapid financial development since the reform and opening to the outside world. The financial markets including money market and capital market are moving to a mature stage; the varieties of financial operation and service areas are enlarging; the financial commodities and services to meet the social needs are reaching higher degrees. The fast financial development has greatly pushed the economic growth and provided strong support for the fly-up of Chinese economy. But we have to see clearly that some deeper contradictions piled up for quite a long time in China's financial field have not been resolved and some financial risks are accumulating to menace China's stable financial development. Hence, preventing and resolving financial risks and maintaining the stable and sustainable financial development have already become the eternal subject of China's financial industry. The government authority must turn around from its traditional strain of thought for the financial development and persistently orient the perfection of financial structure as the focus of China's financial development. Whenever the financial structure is in a perfect state, the sustainable financial and economic development can thus be guaranteed. It will surely have some theoretical value and practical significance for China's sustainable financial development to make some researches on the mechanism of how the changes in financial structure affect the financial stability so as to find some regularity.The dissertation mainly adopted the research method by combining theoretical analysis with empirical analysis. It made serious analysis on the transimission path and mechanics of how the financial structure changes affect the financial stability and then empirically proved the existence of the inner mechanics. Apart from the above-mentioned research method, logical analysis is also another the most important method adopted.The dissertation theoretically analyzed the transimission path and the inner mechanics of how the financial structure changes have an effect on financial stability by affecting the operations of financial institutions and financial markets, the monetary operation instruments, the transmission paths of monetary policy, the effects of monetary policy and financial supervision. By doing so, it made a solid theoretical foundation for the succeeding research.Then the dissertation made deeper analysis on the mechanics of how the changes of financing structure, banking market structure and financial structure in the opening process influence the financial stability and made some empirical test on them.As the financing structure of over-debted corporate is imbalanced to increase the bank's bad loans, it will lead to social financial crisis. The dissertation analyzed the mechanism of how the imbalance of corporate financing structure leads to financial crisis from the micro and macro economic level. By making empirical analysis, it found that the USA, Japan and Korea had all experienced financial instability or serious banking crisis or even financial crisis in the different periods of history. The research of banking market structure affecting the banking stability mainly involves the following areas, such as competition and concentration, concentration and stability, and competition and stability. The benchmark model of competition and crises and the model of agency costs conclude that greater competition reduces the profits or quasi-rents available to managers and/or shareholders. As a result, the gains from taking excessive risks become relatively more attractive and this increases the incentive to exploit the non-convexity in the payoff function since it is guarded by the savings insurance or the government guarantees. If the bank owners or operators succeed in taking the risks, they will get the pay; if their risk operations fail, they will transfer the costs to the insurance agency or savers, thus increasing the bank risks. The bank practices in Latin America and European countries proved that the increasing competition pushes the concentration of the whole banking system, improves and uplifts the efficiency level and is beneficial to the banking stability.The financial structure changes in the opening process increase the volatility of financial markets, the appreciation pressure for the home currency and the instability of foreign reserves, and the growth of bad loans. The entry of foreign banks increases the financial sector instability. It will lead to"the cream skimming effect", the reduction of franchise value and profits and more competition among peer banks to increase the crispness of financial system.At the last section the dissertation made analysis on how China's financial structure imbalances affect the financial stability. At present, the imbalances of China's financial structure mainly appear in the following: the imbalance between policy finance and commercial finance, the imbalance between direct and indirect financing structure, the imbalance in the financial structure between eastern and middle and western regions, imbalance in the financial structure between urban and rural areas and between the opening to the world and opening to home country. It analyzed the financial structure imbalance effect on financial stability and some suggestions on the perfection of financial structure and the maintainence of financial system stability were offered.The main contribution and innovation for the dissertation are: making researches on the transmission path and the inner mechanics of how financial structure changes affect the financial stability for the first time; creatively making researches on financial stability from the perspective of financial structure; empirically proving the above-mentioned results; analyzing China's financial structure imbalance effects on the financial stability and finally offering suggestions on the perfection of China's financial structure and the sustainable and coordinative financial development.