The Research On Building Up The Financial Soundness Indicators In Hunan Province

Financial crisis exploded frequently in 1990s, and they produced strong shocks to the world economy. To maintain the stability of the world financial system, the International Monetary Fund began to promote the"Financial Sector Assessment Program"in the world in May, 1999, and more than 80 economies have completed this program till now. The People's Bank of China started to organize some related units to carry on the self-assessment of financial sector, and from then on, it stepped on a road of building up the financial soundness indicators. Because of the different conditions of each region in China, the People's Bank of China requested each region to build up the financial soundness indicators according to their own conditions. Under this background, I began to think of the establishment of the financial soundness indicators in Hunan province.This paper takes the regional finance of Hunan province as the subject investigated, and builds up the financial soundness indicators of Hunan province which are scientific and complete in some degree.Firstly, this paper makes an overview of the literature which is related with the financial stability, and analyzes the theoretical foundation of the regional financial soundness indicators, and emphasizes the financial soundness indicators which were promoted to the world by the International Monetary Fund in 1999.Secondly, according to the present condition of the financial sector in Hunan province, this paper analyzes and summarizes the characteristics and existing problems of the financial sector in Hunan province.Finally, this paper establishes the regional financial soundness indicators which are the core of this paper. This process includes four steps which are the selection of the indicators, the division of the basic states of financial stability, the determination of the critical points and the weight of each indicator. The indicators include four first-level indicators and forty third-level indicators. The four first-level indicators are the banking indicators, the insurance indicators, the security indicators and the external economic environment indicators. Then, the basic states of the financial stability are divided as the financial stability, the basic stability, the stability worsening and the financial crisis. This paper divides the critical points of each indicator in every different basic state according to the internationally-recognized early-warning value. At the same time, the weight of each indicator is calculated through the analytic hierarchy process. Through these four steps, this paper builds up the financial soundness indicators of Hunan province at last. It is an aggregation which contains finance, economy and other indicators, and it is used to measure the condition of the...