| Since the reform and opening up in 1978, China has being changed from a planned economy to a market economy after 37 years of continuous economic restructuring. In recent years, with promoting marketization process, there are growing calls of interest liberalization. Meanwhile, interest liberalization has a great impact on monetary liquidity, mark liquidity and bank liquidity. In 2008, the American Washington Mutual Bank was bankruptcy due to the over-weight Subprime lending. In 1997, Hainan Development Bank had to declare bankruptcy because of a large number of non-performing assets. In 2011, the funding chain of Wenzhou breaks in a few days. That results in more than 20 billion debt and numerous businessmen escape. The existence of a serious liquidity risk affecting the stability of China’s financial markets, so the regional liquidity risk identification and measurement become necessary. This article analyze the factors of influencing regional liquidity risk in the context of deepening market, rapid economic development, industrial restructuring and financial reform.Based on the data of provinces in 2013, this article uses ADF test and cointegration test to build the money demand function after analyzing the money supply and money demand factors. Measuring the money supply by deposits currency and cash currency and calculating regional liquidity risk by Va R value. Finally, this article figure out the liquidity risk area with spatial effects by using the Moran’s I index. Selecting regions of liquidity risk variables from different aspects including the money demand, money supply, market process and other macro affect variables. At the same time, taking into account the geographical space weights, this article find the main factors of regional liquidity risk using spatial lag model.The first part of this article is the introduction and the second part is the literature review including research background, purpose, significance and current researches. The third part is the theoretical part, it analyzes the influencing factors of regional monetary supply and demand for money and measures liquidity risk by three ways: the liquidity gap, liquidity risk Z value and liquidity risk Va R values. The fourth part is the empirical part, it analyzes regional liquidity risk by the spatial lag model according to the theoretical part based on the regional provinces data. The fifth part is the conclusions and recommendations, based on the results of the empirical analysis and the corresponding recommendations.In this article, the final conclusions are as follows: 1. In terms of the money supply, the investment of technical level and labor level have a positive effect on liquidity risk. And the more household and government consumption are, the greater amount of money supply is at the same time the higher risk liquidity has; 2. In the context of the deepening marketization of the economy, liquidity risk area will become smaller. In the sub-index market index, the less government intervention in the market and the more perfect the development of product market is, the regional liquidity risk will be smaller. 3. The faster growth of China’s economy, maybe will result in the increased regional liquidity risk. It’s indicating we need to pay attention to the quality of economic development as well as the economic growth. With the continuous expansion of financial development, it will reduce the regional liquidity risk. |
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