Construction And Empirical Analysis Of The Financial Risk Early Warning System Of China

Since the seventies of last century, crisis of dollar and economy always break, since then, Global financial landscape began to insecurity, the massive financial crisis often happen. In the 21 st century, the degree of financial liberalization deepens, economic pattern develops to globalization, and the influence of the financial crisis and the frequency also gradually expanding. Since reform and opening up, China has a rapid development for 40 years, and is taking a posture of the emerging market countries into the global economy and the global financial system. With the trade between China and other countries becoming closer, the financial risk upgrades. This kind of financial risks which can infect each other and influence each other has a big impact for the economic stability of a country. In addition, in the view of domestic, our country is experiencing a new period of financial reform, some financial innovative models such as Internet Finance is developing rapidly, and the underlying risk is on the rise. In addition, the local government debt is higher, and the real estate industry also begins to enter a sensitive period, the risks China is facing are not only unsystematic risks, but also systemic risks which will cause harsh consequences once happen. Select appropriate risk early warning indicators, and establish the early warning system of financial risks, then we can find the risks in time and avoid the occurrence of financial crisis. In this way, we may ensure the steady of economy and stability of financial system of our country.Based on the existing four generations of the financial crisis theory, and according to the result of them, the early warning index system of China’s financial risk is constructed from micro, macro and external shocks. In addition, this paper did a comparative study on the early warning system of foreign countries’ financial risk, and draw lessons from the existing research results at home and abroad. And then use the analytic hierarchy process to determine the weight of each index and show different degrees of risks through the different colors of light. Using the actual value of each index during 2000-2014, the empirical test was carried on for the construction of the rationality and practicability of the index system of inspection. And then with the forecast of the 22 indexes in 2015, the paper predicts the situation of the overall financial risk in our country. Finally, in view of the building process of the early warning system and the prediction of the state financial risk in our country in 2015, the paper put forward some views and suggestions.