Study Of The Mechanism And Prevention Countermeasures Of The Financial Crisis

With the rapid development of global economy, the application of financial innovation and the internationalization of networking technology, economic development of each country tends to be closely connected with each other. People are benefiting from the fast developed commodity economy, while at the same time suffering from the financial crisis. Although the pace of American subprime mortgage crisis broke out in2008has not gone so far, a continued financial panics and recessions are still top our mind. A joy of recovery was heavily destroyed by a fall of American credit rating which led to a new wave of panic. Given these facts, a research of finding out the deep-seated reasons and proposing preventive suggestions seemed urgent.After a look at previous researches, it is clear that most scholars have focused on the monetary perspective. They thought the causes of a crisis were attributed to monetary inflation, excessive innovation and lacking of supervision. While, under a further analysis of the mechanism, I realized that the outbreak of a crisis is not simply due to a short-term monetary unbalance, but a gradual impact on financial system which caused by the influenced real economy in a long-term. All of these lead to a burst of virtual economic bubbles, and a final crisis.On the basis of previous studies and a research gap, this paper will make a new attempt to explore the deep-seated reasons of international financial crisis. It will analyze the causes of crisis in a perspective of real economy; and also draw a detailed explanation of how monetary system is gradually impacted and how a crisis is finally formed. In the last part of this paper, a conclusion is made to provide a useful reference for the prevention of a new round crisis.This article is divided into six chapters:The first chapter is an introduction;the second chapter is literature review; chapter three is the meaning and causes of the financial crisis;chapter four is financial crisis mechanism; chapter five is test case and chapter six is recommendations for the prevention and treatment. The main point is:the main reason of the financial crisis comes from the real economy, as the real economy development imbalance lead to social imbalance between supply and demand,and expansion of commercial credit and investment-savings imbalances, import and export imbalance as well as international capital flows and other factors propell it, in the end, the evolution of the social imbalance between supply and demand become the total social supply and demand imbalance, the final expansion in the virtual economic bubble burst and then break of financial crisis.The main innovation of this paper:the first,outbreak of the financial crisis rooted in the ratio of the real economy development imbalance;the second,this paper’s analyzation will focus the crisis mechanism, take clear logic of a thorough analysis of the crisis at all levels.At the end, the paper will draw effectively suggestions to combat the crisis, and thus make some contribution to the smooth development of economic globalization. On the basis of previous studies, this paper stresses on the occurrence mechanism of crisis. From the perspective of real economy, a few methodologies like analyzing from the elementary to profound, studying from the outside to the inside are used to find out the root causes of crisis, the different stages and their inner logical relationships in the process of a crisis. In addition, a further mechanism study about the recent typical crisis-the American subprime crisis is used to support the research and help draw the conclusion that it is due to the unbalanced development of real economy that lead to a burst of virtual economic bubbles, finally a crisis is formed. According to the analysis mentioned above, some effective suggestions are put forward to help preventing a new round of crisis.The lack of this paper:study of relevant literature is mainly based on the monetary level, or a single from the real economy and virtual economic relations point of view.make less available-for-learn,and there is more a lack of crisis mechanism;on the other hand, for the crisis, many scholars research point of view to collect data from the exchange rate, interest rates, securities, stock index and other,less study in the industrial development of data analysis,so it will bring much trouble for mystudy.