Research On Risk Management Of China Security Market

Although the development periods of China security market is short, its rapidly development, violent price bring big challenge and risk to the market, and have negative effects on the functions of playing to raise finances, optimize the allocation of resources, perfect the modern enterprise system, promote the reform of market economy. Therefore, the research on risk management of the security market is particularly important. Most researchers currently use empirical methods to do data analysis, through quantifying data to draw the conclusions, but not do further mining on the deep-seated causes and inherent causality. The financial system frequently presents typical complexity, and financial variables often show complex nonlinear and dynamic characteristics, so we need to study through combining the qualitative and quantitative methods. The system dynamics is a simulation analysis method from structure to function, and it’s the optimal method to solve complex system problems. Although it has been widely applied in the social economic fields, the research on risk of security markets is rare. So, it’s a good research trend for the study of security market’s risk that use the theory and method of system dynamics to deal with complex problems.Based on system dynamics theory and research ideas, we firstly select the high-frequency data Shanghai composite index to study the complex nonlinear characteristics of China security market. Then we use system dynamics method to research risk factors, internal relationship and importance systematically, and we establish risk index system, to broaden perspective of researching on the management of security markets risk. In this paper, we have analyzed from different risk categories, and divided each subsystem of systematic risk, distinguishing two categories of investors in security markets by their differences of decision basis and information, establishing a system dynamics model to describe information feedback mechanism. We simulate and analyze how the difference of liquidity need and proportion of the two type investors affect the price, to compare the differences of the market price behavior. Finally, we put forward some countermeasures to prevent and resolve the risk of the security market, to strengthen risk supervision, to effectively promote the sound operation of China’s security market.