Analysis Of The Influential Factors Of RMB Cross-Border Transaction

Since the financial crisis in2008, Chinese economic influence on the world has increased rapidly. As the worlds’second largest economy, Chinese economy has a pivotal position. However, despite the fact that the internationalization of RMB has made significant progress in the past five years, the overall development of cross-border RMB trade still lags behind Chinese economic status in the world. Therefore, the call of accelerating RMB cross-border transactions and improving RMB influence in the world is strengthened. Many scholars have conducted studies concerning RMB cross-border transactions, including currency developmental path of RMB internalization, how can RMB cross-border transactions as an important part of RMB internalization play an active role in it, the developmental history of RMB cross-border transactions, and the risk prevention of RMB cross-border transactions, etc. However, most studies are limited to qualitative research.This study aims at both quantitative and qualitative researches on influencing factors in RMB cross-border transactions, so as to make up for deficiencies in empirical aspects of previous studies. First, by reviewing researches both abroad and at home concerning RMB as an international currency, this paper makes a qualitative analysis of the conditions and related theories about RMB cross-border transactions, as well as current conditions of developing RMB cross-border transactions. Then, this paper conducts empirical research from two perspectives, one of which is to determine whether the time for overall development of RMB cross-border transactions has been ripe or not. Taking highly internalized currencies such as US dollar, Japanese yen, British pound as examples, this research establishes panel data models and analyzes qualitatively the factors influencing currency cross-border transactions and their extent of impact. Subsequently, this paper conducts preliminary empirical analysis of influencing factors in RMB cross-border transactions. Based mainly on analyzing the process and status quo of RMB cross-border transactions, this part establishes binary discrete choice models and studies influencing factors concerning RMB in its initially internalized stage with empirical analysis method. Synthetical studies reveal that various factors have enhanced the acceptability of RMB in cross-border transactions and exerted profound influence upon RMB cross-border transactions, for example, the rapid development of Chinese foreign trade, the constant liberalization and innovation of RMB capital account, the strengthening and expanding of international cooperation, the continuously deepening of financial reform and opening up, the lively demand for RMB in offshore market, as well as currency stabilization both internally and externally.RMB cross-border transactions have presented a rapid development momentum, with a high frequency of issuing polices aiming at driving RMB cross-border transactions in2014. In spite of the facts that this progress has, to some extent, exceeded theoretical expectations and failing to update data timely and comprehensively may have an impact on analyzing influencing factors in RMB cross-border transactions in this paper, the internalization of RMB is an irresistible trend with an optimistic prospect. Finally, this thesis proposes that by supporting ’One belt and One road’strategy and regional economic cooperation, the international prestige of RMB will be further improved and the prospects of RMB cross-border transactions will be more promising.