Research On Estimation Of Regional Financial Stability Of China

In the year of global financial turmoil, the economic growth of different regions of China show great differences. The economy of east section suffer cold snap widespread and the city of Shanghai once experienced zero ecnomic gwoth rate, while central section kept a high economic growth which is above the average of different regions of China, and west section continued its previous ecnomic growth trend. In the process of economic growth before the financial turmoil, huge risk has been accumulated among different regions, provinces and industries. It may bring hidden troubles for the economic growth and financial deepening of different regions in future. As the financial turmoil went on, the influences brought by external shock on different regional financial systems show large divergence and regional financial stabilities changed a lot. After the financial turmoil, loosing and expanding monetary policies have been used to stimulate the economy, which cause the instability of financial systems of different regions increasing. Meanwhile, the adjustment of domestic industrial structure and the movement of some industries from costal region to inland region will cause influence to the economy of central section, and the influence brings unknown effect to the financial system. Ristricted by the regional economy scale, soundness of regional industrial structure, regional competetive ability of enterprises and human resources, the ability of guarding against and removing risk from the financial system of different regions will be different. Based on the above reasons, it is theoretic and realistic to make systematic research and estimation on the stability of regional financial system.Until rencently, few literatures of estimation on regional financial stability contains both systematic theory and conclusive empirical analysis. Most domestic literatures on regional financial stability focus on layering indicators research which cause the conclusion subjective and weak connection to the macro-economy and economic departments. Based on the overview of the literature on financial stability and financial stability estimation, under the concept and analytic framework of macro balance sheet, this paper provides the ways and indicators of estimating financial stability of central section. Besides, considering the domestic disputes on the asset bubbles and the restraints of the traditional contingent claim approach, this paper amend the model of contingent claim approach and measure the bubbles of domestic stock markets to obtain actual quantitative conclusion of financial stability of central section. This paper also gives a cross-sectional and historical comparison of financial stability of central section based on the provincial situation of economy and finance. Finally this paper provides suggestions on regional financial stability maintenance and regional financial supervisions due to the empirical conclusion.This paper contains seven chapters and its structure is as follows:Chapter 1 is introduction.Chapter 2 gives an overview of previous literature study on the concept of financial stability, including direct and indirect concept of financial stability, then this chapter makes a theoretic explanation to the issue of financial stability from the view of traditional economics, information economics. After that this chapter compares the empirical analysis of financial stability, includes the factors affecting financial stability and estimation of financial stability. At last this chapter introduces the theoretic and empirical study of regional financial stability from foreign and domestic literatures. From the information of these literatures, there is no systematic explanation on estimation of regional financial stability.Chapter 3 starts from the standpoint of stability estimation. This chapter formally introduces the concept and the framework of estimation of regional financial stability, classifies and comments on the previous ways of estimating financial stability. Practice and restraints of these ways have been detailedly discussed.Chapter 4 provides a way of estimating regional financial stability based on the framework of macro balance sheet for innovation. This chapter introduces the concept of macro balance sheet and the details of balance sheet approach and contingent claim approach and design the indicators of financial stability based on department balance sheet which is formulated from the contingent claim approach. At last this chapter amends the contingent claim approach to make the stability indicators more realistic in reflecting the regional financial stability.Chapter 5 gives a brief analysis on the financial structure of central section, to provide some basic information of the empirical analysis of estimating the financial stability of central section, and to match the basic situation and the indicators of central section.Chapter 6 uses the innovative ways and indicators for estimating regional stability, to empirically estimate the financial stability of central section, and uses the macro stress testing to forecast the change of influences on financial stability from the factors which influence financial stability. Finally this chapter gives a conclusion on the actual financial stability of central section based on the empirical analysis.Chapter 7 offers suggestions on regional financial supervision and regional financial maintenance for maintaining the regional financial stability due to the conclusion of the empirical estimation.Although the worst situation of global financial turmoil has gone, under the circumstances of fast rise in asset prices and shortage in real effective social needs, regional economic growth and regional financial stability may suffer severe trials again, and the macro risk in the process of economic growth and financial development may be more serious. More effective ways in risk management need to be implemented to maitain the regional financial safety and stability.