Financial Risk And Prevention Countermeasures

As a transitional state, China has implemented reform and opening-up policy for more than thirty years. During this period, China’s economy made marvelous achievements, so did reform in financial circles. However, people still worry about the accumulating financial risks and other factors making financial system unstable. China did successfully bear the impact of the global financial crisis in2008, but it does not mean that our financial system has the ability to resist any risk. On the contrary, there are many potential factors which can make our financial system unstable.This dissertation makes use of theories from many disciplines. It starts with the theories of financial risk, analyzes risks and main factors in financial field qualitatively and quantitatively, discusses how to prevent financial risks effectively, and comes up with relatively systematic measures to stabilize financial system.The first chapter, introduction, mainly discusses theoretical significance and practical significance of financial risk, presents research on financial risk at home and abroad, combs research findings, including macro theoretical analysis, micro theoretical analysis, and resource and influence factors of financial risk. At last, it introduces the frame and research methods of this dissertation, and summarizes its innovations and shortcomings.The second chapter analyzes basic theory of financial risk from the perspective of public finance. Starting from basic theories of economics, it analyzes formation mechanism of financial risk and introduces related theories and hypotheses of financial risk. It also analyzes interaction mechanism between financial risks and fiscal risks. First, it analyzes relation between public finance and finance. Second, it does research on how financial risk is transformed into public financial risk, and how public financial risk is transformed into financial risk. It also explains game model of reaction between public financial risk and financial risk. Finally, it introduces two types of financial risks, micro financial risk and macro financial risk, and then comes to the conclusion that government should shoulder fiscal responsibilities of macro financial risk.The third chapter focuses on main experience of how to prevent and dissolve financial risk. To cope with the global financial crisis in2008, governments adopted positive fiscal policy and monetary policy, which aimed at achieving economic revival. By doing empirical research on America, European Union, Japan and Russia, this chapter relatively systematically discusses policies which governments adopted to reply economic crisis which appears suddenly, and makes brief comments on effects of these policies, on the basis of which it summarizes experiences and lessons from what governments have done to deal with financial risk.The fourth chapter analyzes risks which financial field encounters. First, it introduces that financial risk under planned economy system are presented as policy risk and operation risk. Second, it presents basic types and formation mechanism of financial risk during transition period, and analyzes influence of financial risk on economy. Third, it explains influence of financial liberalization on domestic financial institutions and financial supervision system. Last, it reviews policies aiming at guarding against financial risk.The fifth chapter discusses the financial crisis early warning and risk measurement model. First, it introduces financial risk management models; analyzes market risk model, credit risk model and financial risk management model. Second, it introduces the financial early-warning model; analyzes the basic idea of the financial early-warning model, several forms of financial early-warning model, the financial early-warning model applied in China and development of financial early-warning model.The sixth chapter comes up with suggestion to guard against financial risk. First, it brings up fiscal policy to prevent financial risk, and suggests increasing financial allocation, promoting financial reform to perfect operation mechanism of asset management companies, and strengthening the ability of public finance system to prevent risks. Second, it puts forward monetary policy to prevent financial risks, and suggests providing more instruments of monetary policy, establishing proper targets of monetary policy, and making conduct mechanism of monetary policy run smoothly. Third, it raises policies aiming at macro prudential supervision to prevent financial risks, and suggests furthering macro prudential supervision. Finally, it comes up with other supporting measure to guard against financial risks, and suggests perfecting company governance structure of state-owned commercial bank, establishing deposit insurance system, and forwarding financial liberalization steadily.Financial risk and its countermeasures are focuses of governments when they promote development of economy. To speak objectively, there have been many researches on financial risk and its countermeasures from the view of micro. However, from the view of macro, it still needs more deeply discussion in many fields. There are two innovations in this dissertation.First, drawing lessons from global financial crisis, this dissertation analyzes the symbiosis and interaction between financial risk and public financial risk on the basis of theoretic research on financial risk from the view of macro. Basing on reform and opening-up of China’s finance, this chapter analyzes risks that China’s financial system encounters, and discusses monetary policy and fiscal policy which can successfully tackle financial risk.Second, this dissertation attempts to bring up systematic theories and experiences to explain this question from the angle of interaction between public finance and finance, discusses how to integrate all forces to prevent financial risks effectively under new circumstance, and enriches research on how to guard against financial risks in countries in transition.There are some shortcomings in this dissertation because of my academic level. These shortcomings are as follows:First, with acceleration of flow of international capital, contagion effect and spillover effect between foreign market and domestic market will become obvious, and it is necessary to promote research on their conduct mechanism and effectively preventive measures.Second, interaction between fiscal risk and financial risk is a typical economic phenomenon in many transitional countries. However, depth and width of qualitative analysis of this phenomenon will be influenced by limited documents and difficulties of obtaining related data.Third, we should keep on discussing and doing research on some topics. They are whether there exists inevitable causality between financial infrastructure and financial risk, what quantitative relationship between financial risk and economic development is, and how to optimize policies of financial supervision.