The Study On China's Banking Fragility Which Based On Financial Institution Theory

Banking system is the main body of our country's financial system, which directly affects the stability and advancement of country's financial system. This paper thinks that banking system fragility is the fragility of institution based on the theory of financial institution, and the intrinsic and external flaws of financial institution are the causes of its fragility. Along with banking institutional changing, the bank risk exposing one by one, the former institution can not adapt the new economic environment, which is the hidden danger for the later financial crisis.Firstly, it introduces the theoretical study of financial fragility and defines the concept of banking fragility, it has carried on the narration to reciprocity of the banking fragility and the bank risk and the bank crisis simultaneously. Then it has proposed the cause of banking fragility is the financial system flaw, which has carried on the elaboration from the angles of crosswise factor and the longitudinal institution vicissitude.After that, I research on our banking fragility from the theory and the empiricism. The first is research of the theory, and based on analysis of our country present financial institution, it proposes the causes of the intrinsic and external of financial institution which lead to banking fragility. The intrinsic causes include the structure of institution, the property right and the mechanism of internal control and so on. The external causes include the economy of information, the liberalization, the construction of safety net and the influence of market restrains to banking fragility. It analyzes another factor of our country financial institution vicissitude: the hypothesis of institution vicissitude cost. The empirical research has carried on the analysis to the present condition of our country's banking fragility, using several key indicators to carry on qualitative and the quantitative analysis of banking fragility in 1991-2005. Based on the synthesis measures, this paper has selected three groups of 16 variables including the macroscopic variables, the financial variables and other variables, using each data of variable in 1991-2005, utilizing Logit model to analysis banking fragility and drawing the conclusion. It concludes that the principal contradiction of our country's banking fragility is in the institution, is the flaw of present financial institution in economical switching process. Finally, according to the result of the theory and the empiricism, I think that it constructs the examination system of banking fragility as soon as possible and proposes the corresponding suggestions and measures to solve banking fragility for strengthening the steadiness our country's banking.