Chinese Banking Industry Fragility And The Influence To Entity Economy

The financial history is also the financial crisis history,saying in some sense.People are interested in discussing the harm of financial crisis,but pay little attention to financial fragility,which is the preparatory phase for financial crisis.However,the issue of financial fragility is important,because we are able to prevent risk coming up,guard against the financial crisis,and let finance to support the substantial economy,only when we understand totally the generating source and developing mechanism of financial fragility.In above background,This paper analyze the generating source of Chinese banking industry fragility in the view of liquidity transaction,expound the “self-strengthen” effect of banking industry fragility,discuss what's the affecting mechanism from banking industry fragility to entity economy.Followed is the train of analysis:Firstly,based on existing literature,this paper analyze the generating source of Chinese banking industry fragility in the view of liquidity transaction,points out that it's separated for banking to absorb and distribute liquidity in times and space,which means the liquidity mismatch is necessary,for this reason banking have internal fragility.The banking industry fragility have many particular expression in China.This paper structures a “liquidity transaction”model,in which the serious degree of banking industry fragility can be approximately indicated with the area of a “curve-brim-triangle” through reduction.Followed,this paper states that banking industry fragility can self-strengthen,which means banking industry fragility will evolve spontaneously to financial crisis not depending on special outside environment,banking industry fragility developing with different speed under different environment,outside impulse can accelerate the development speed of banking industry fragility even lead directly to financial crisis.Based on above theory analysis,this paper imitates the changing tendency of Chinese banking industry fragility from 2002 to 2015,the result indicated that the general changing tendency of Chinese banking industry fragility is concussion-down,but if we get rid of the factors of Non-performing loan ratio substantially declining and capital adequacy ratio rising since 2002,the serious degree of Chinese banking industry fragility is increasing.What's more,this paper discuss the response of banking industry fragility to the impulse of money supply,interest rate,Non-performing loan ratio and capital adequacy ratio,using VAR model and impulse response method.Secondly,this paper demonstrates the affecting mechanism from banking industry fragility to entity economy,which is divided into 2 parts.In theory analysis part,this paper discusses how healthy banking system affects entity in the angle of banking function,expounds how banking industry fragility block the mechanism working on,which is supposed to be effective and positive,reveals the risk transmit path and result,analyzes how the“self-strengthen”effect react in the the risk transmit process.What's more,this paper establishes a banking's “optimization selection”model,aimed to demonstrate how the bank allocate its liquidity between the entity economy field and virtual economy field.In empirical research part,this paper verifies whether the banking industry fragility observably influence the entity economy-virtual economy structure,tests whether there is relativity between banking financing and virtual economy bubbles,proves whether banking financing supports entity economy development remarkably.At last,based on analysis conclusion,this paper proposes policy advice from two different angles of macro-regulation and micro basis.In the analysis process,both theory analysis method and empirical research method are used.On the one hand,this paper establish a relatively complete analysis framework to research banking industry fragility and the influence mechanism to entity economy based on economics and finance theory.On the other hand,this paper uses econometrics method to verify relative viewpoint.This paper mainly have three innovation points.The first point is that the “liquidity transaction”model is established for the first time,in which the serious degree of banking industry fragility can be approximately indicated with the area of a “curve-brim-triangle”.The second point is that the influence mechanism of banking industry fragility to entity economy is formulated,a complete analysis framework is taking shape.The third point is that the newest data is used in relative empirical analysis and some valuable results is received.