The Analysis Of Debt Crisis Early Warning In Developing Country Based On Logit Model

In recent years occurred in Europe and the Middle East and other countries of thesovereign debt crisis, the line of vision of people to silence the moment the sovereigndebt market, once again raised the risk of default on sovereign debt concerns. In fact,in the long river of history, almost every country in the process of economicdevelopment have happened event of default, even in Europe and the United Stateswho now economy is developed, and there is no exception in its early in the processof economic development. Since the establishment of the new Chinese has not had thesovereign debt crisis. However, with the deepening of economic reform Chinese andfurther integration with the world economy, facing the future economic developmentof uncertainty will also increase. As of2013December, China has3.8trillion inforeign exchange reserves. How to hedge the investment of the foreign exchangereserves is a very important problem. The main place for the national sovereign debtis still sovereign funds at present. Construction of the sovereign debt crisis earlywarning system, which helps Chinese identify his country sovereign default risk,reduce the size of the loss of investment, but also help to Chinese to strengthen selfconstruction, to attract foreign capital and national economic development.In the past few decades, economic system crisis occurs in many emerging marketcountries frequently, which caused great impact on the global economy. Of all thiscrisis, the debt crisis and the monetary crisis are in the highest frequency ofoccurrence. Many scholars focus on finding a mathematical model of warning thecrisis. Due to data availability and the relatively simple and accurate definition ofcrisis and other reasons, most literature research for many years for currency crisestend to neglect the other important types of crisis, that the sovereign debt crisis. Inrecent years, with the continuous improvement of technical means and the rapiddevelopment of Internet, television and other media, for the study of sovereign debtcrisis is getting more easily.Firstly, sort out the theoretical basis of the debt crisis and the early warning model.Mainly expounds the connotation and features of the debt crisis, the causes of debtcrisis; debt crisis early warning model of traditional, combing through thesetheories, and laid a solid foundation for the later research.Secondly, the debt crisis pre warning method and index selection. As a traditionaldebt crisis early warning method is introduced before, through analysis andcomparison of the traditional debt crisis early warning method, summarizes allkindsof methods, on this basis, choose the debt early warning method based on Logitmodel, and the applicability of this model, the selection process of crisis earlywarning indicators, including the principle, selection and description of earlywarningindicators.Thirdly, based on the Logit model, analyzed the time difference and regional difference in developing country of debt crisis warning system. The research of datafrom1980to2010,which has a total of31years of Latin America, Asia, Europe, atotal of18developing countries, in the statistical description of the sample data, wereanalyzed the debt crisis early warning model of time difference analysis and regionaldifferences, the results of the research process analysis, including setting up earlywarning model and analyse the early warning effect.Finally, summarized this research conclusion, put forward the problems in theresearch, and forecasts the future study.The innovation of this paper has certain innovation for the early warning of debtcrisis, according to the selected indicators, this paper uses logit model to select threemajor categories of13indexes, analyzed respectively the debt crisis early warningmodel of time difference and regional differences, through analysis showed that, atdifferent times, the possibility of a debt crisis index has the very big difference, indifferent regions, as an effective early warning indicators of the debt crisis is not thesame, so the method the time region analysis, the prediction results more accurate, theempirical results show that the method in the prediction accuracy rate compared withthe other methods have comparative advantage.Besides, in the study of previous crises in the literature, most of the literature usingsignal analysis, national income method and neural network method to forecast, themethod has a certain degree of accuracy, but with the economic activities havebecome increasingly rich and economic system is being perfected, these methodsgradually reveals its limitation, and in view of the domestic study on sovereign debtcrisis relatively little literature, most of the literature study are on the financial crisisand currency crisis, but there is a big difference between the two crisis in this paper,so the literature will study the debt crisis and the sovereign debt crisis is singled outfor description and prediction, and the possibility of a country’s sovereign debt crisisoccurence.