Financial Risk To Prevent The Problems And Countermeasures

Concomitant with its role as a growing trade giant in the global arena, China's susceptibility to the rest part of the world is increasing. The slightest sign of disturbance in the international financial sector may bring impact to China's internal financial and economic markets, it may also be accelerated to financial crisis. Therefore, a high awareness of the devastating affect that financial risks can have on economic system is of much importance. Two sources of the financial risks in China are forwarded in this paper: the first one is similar to that of the western countries; the second is derived from the weakness of the laws and regulations guarding this area in China. Hence we need both to learn from the lessons the westerners have experienced and to build up a prudent system fending off financial risks, namely, this system is to include framework innovation, sound law system and adaptation of new methods.The capital market in this paper covers the banking sector, security sector, insurance sector and trust sector. The tentative plans warding off financial risks are based on the study of the above listed sectors. In the first of the four parts of this paper, we see an anatomy of the major causes of financial risks and their various types; in the second part, we have a close look at the symptoms of financial risks we see in China; the third part deals with the root of the financial risks in China, which is mainly a systemic problem. The last part presents tentative plans of solving the problems.