The Impact Of Hot Money Flow On National Financial Security

During the decades of reform and opening up,China's economy has risen rapidly by nearly 10%per year,and its economic growth has been strong.Economic growth and the stability of the domestic political environment,in 2005 China's foreign exchange reform,the international hot money into the large-scale arbitrage.This phenomenon lasted until 2014,after entering 2014,China's macroeconomic environment changes,From the sustained low of the economy,the RMB exchange rate is no longer unilateral appreciation,the stock market bubble burst and the global financial environment changes,the US economy gradually began to recover.In October 2014,The United States withdrew from the quantitative easing monetary policy,Chinese and American spreads began to shrink.In this series of processes,China's foreign exchange reserves transform from the previous rapid increase into a slow decline.It can be seen that the international hot money began to withdraw from China around 2014,and brought great impact to the stability of the financial market.In view of this problem,this paper takes the stock market volatility as an example to examine the international hot money flow's influence to China's financial security.Based on the definition and basic characteristics of hot money,this paper analyzes the theory of hot money flowing in the world.Followed by examples of The Financial Crisis Caused by the Large-scale Flow of Modern Hot Money.Second,use the direct and indirect method to calculate China's hot money scale.The results show that May 2014 is the turning point.Before the point,hot money flow showed a trend of inflow overall.After the point,hot money began withdrawal from China in large-scale.After that,in the empirical study section,this paper selects the vector autoregressive(VAR)model,uses Granger test,impulse response analysis,variance decomposition analysis to examine the international hot money flow's influence to stock market volatility.The result of this paper is that there is no causal relationship between the change of hot money and the change of stock index.The inflow of hot money does not influence the stock market v,stock market volatility will not cause changes in hot money flow.More than 5%of the volatility of the stock market's Shanghai Composite Index is related to the flow of hot money,90%of the causes are related to the emergence of the stock market's own information.At last,the international hot money for large-scale access to China's current situation,this paper puts forward own policy recommendations.