Research On The International Transmission Effect Of Subprime Mortgage Crisis: Based On China

The recent global crisis—the deepest and most widespread since the1930s by anymeasure—has refocused attention on spillovers across countries, the synchronization ofthe economic recession makes academia began to focus again the internationaltransmission of financial crisis. In fact, in the previous financial crisis, only a few was apurely domestic crisis, the vast majority of crisis spread from one country to anothercountry, which is regional or international financial crisis. Until the late1990s, this issuewas a cause for concern, especially after the Asian financial crisis. Because no one wouldhave predicted the crisis began from the small country in Southeast Asia would lead to aseries of financial crisis in Russia and Brazil, and eventually swept across half the world.Since the1990s, the twin crises frequently broke out, its characteristic of longduration and extended magnitude caused serious losses, which caused wide academicattention: Accompanied by the accelerated process of economic globalization andfinancial integration, the world is increasing linkages between the economies, whichprovides a basis for the generation and transmission of financial crisis; While theextremely active of financial innovations created means of decentralization and highleverage makes the risk spread, which provides the condition for the transmission andupgrade of financial crisis. This means that China as an important part in the globaleconomy, its external demand-led growth pattern and the risks of progressiveliberalization makes it can’t decouple from the financial crisis. The recent global crisishas been fully verified it.This paper will review macro-economic change of China from a qualitative point ofview, and set up the financial stress index as a starting point. Then, this paper will testwhether it has the transmission effect on China, and use the least squares regressionmethod to quantify the transmission effect among domestic economic fundamentals,trade and financial factors. Finally, based on the above analysis, this article will evaluatethe crisis response policies and proposes the policy recommendations of transmissionprevention.