Study On The Internal Mechanism Of The Bank Systematic Fragility --Taking Representative Banking Crisis As Example

The U.S. subprime crisis spread around the world crazily in 2008, which brought serious and destructive result to many countries in political, economic and social aspects, our country also received heavy blows. We all know that china is at an significant stage of economic reform, with the accelerated pace of opening up, institutional risk increased constantly, it become a serious problem for china to maintain financial system stability and keep stable development. The U.S. subprime crisis aroused our attention to maintain a stable banking system. This article is to research the principles of financial crisis innovatively through the Asian financial crisis and The U.S. subprime crisis, and to illustrate the importance to reduce the banking system fragility, so as to provide reference for china to maitain the health of banking system development.Traditional crisis theory insist that it is the deterioration of economic fundamentals that attribute to financial crisis. However, before the outbreak of the Asian financial crisis and The U.S. subprime crisis, the economic fundamentals of these countries performed very well, even before the outbreak of the Asian financial crisis, Thailand, Malaysia, South Korea and other countries have even been known as the Asian miracle according to the World Bank, but it is in these prosperous countries that severe fiancial crisis outbreak overnight, Why? Why the traditional theory failed? In this paper, we try to analyse the Asian financial crisis and the U.S. subprime crisis mechanism, to sum up the internal and external factors that attribute to fiancial crisis, and comparise the importance of these factors to reache the result that the banking system fragility is the endogenous source for the outbreak of financial crises, while external shocks amplificated its effect, and trigger a financial crisis.Then we try to analyze the fragility of China's banking system and to find that the stability of our banking system lie heavily on governmental salvation, making the risk of our banking system being in a suppressed state, and the crisis performed differently with other countries. the result of our banking syestem fragility is not banking crisis, but lead to the deeper distortion of financing system, it cost more and more to maintain the existing banking system, the efficiency decreases heavily and eventually hinder economic development. In this paper, due to the special nature of China's banking system, we try to propose policy recommendations form two aspect:the internal banking system development and the national policies, so as to decrease the degree of China's banking system fragility...