A Research On The Measurement Of China Currency Mismatch And Its Influencing Factors

As a pervasive economical phenomenon in the emerging-market countries,currency mismatch will influence the economy of one nation dramatically.Currency mismatch refers to a situation that an economic entity's net foreign currency assets or liabilities are caused great losses in varying degrees due to the fluctuation of exchange rates when it uses both domestic and foreign currencies to value assets or liabilities during the international payments process.When the domestic currencies of the emerging-market countries which have early been burdened with much net foreign currency liabilities devaluate,it will cause difficulty for debt payment and even trigger a national economic crisis.The huge foreign exchange reserves will make the foreign investors expect the local currency to appreciate,therefore,much foreign capitals flood the domestic nation to raise the assets price and it will cause economic bubbles eventually.Meanwhile,the currency mismatch will influence the currency and public finance policies,and it seems that it will damage the nations especially the emerging-market countries with the developing domestic financial markets seriously.China has increased the balance of current account surplus substantially and subsequently accumulated huge foreign exchange reserves as a result of the early export oriented strategy,which directly causes the gradual aggravation of the creditor-type currency mismatch and the risk of economic crisis.So it is significant to analyze the fundamental factors of China currency mismatch and estimate the influencing degree by studying empirically in order to make the relevant economical proposals.This paper consists of five parts,and firstly Chapterl introduces the study background and significance and analyzes the macroeconomic situation and creditor-type currency mismatch status of China,then it discusses about the realistic meaning of the currency mismatch in China and introduces the study content,methods,innovation and shortcomings of this paper.Chaapter1 also states the literature review inside and outside about the currency mismatch and its influencing factors.Chapter2 introduces the conception,classification and theories of currency mismatch.Chapter3,which is the principal part,mainly estimates and analyzes the degree of the currency mismatch in China from 1986 to 2016 and it is based on the revised AECM index,finding that it has five phases which sets 2009 as the dividing point:it has grew slowly at the original time and then fast,and dived to the level in 2006 at last and concludes each phase.At the same time,it finds that the degree of China currency mismatch is relatively small and stable through estimating the degree of BRICS currency mismatch with the revised AECM index and comparing internationally.Chapter4 analyzes the influencing factors of China currency mismatch empirically and establishes the multiple linear regression model to make the co-integration test of the factors,and it turns out that CPI,international reserves,REER,financial solvency,openness of capital account and the development degree of financial market have a long-term co-integration relationship between the degree of China currency mismatch.Besides,this paper makes the Granger Causality Test of China currency mismatch and its influencing factors,and it presents that the mentioned factors are the significant factors which impact China currency mismatch.The last part makes the proposals for reducing the creditor-type currency mismatch in China according to the current characteristics of China currency mismatch and the empirical analysis results.In research methods,this paper adopted qualitative analysis method,analyzing and interpreting the theories,essential concepts,measurement indexes,and economic effects comprehensively by reviewing the relevant literature.Then,this paper applied the comparative analysis method to compare and analyze the data of China currency mismatch from 1986 to 2016 vertically,and summarized the alteration trend and the relevant characteristics.At last,it applied the STATA to analyze the influencing factors of currency mismatch by establishing the multiple linear regression model and explained the test results,using the quantitative analysis method.The innovation of this paper is selecting the revised AECM index which suits the present characteristics of China to calculate the degree of China currency mismatch and calculating more correct index by adopting the long-span and recent data.Meanwhile,it estimates the degree of BRICS currency mismatch with the fixed AECM index and makes the horizontal comparison between the degree of China currency mismatch,facilitating the understanding of the status of China currency mismatch.This paper also analyses the influencing factors of China creditor-type currency mismatch systematically and selects the economic growth rate,REER,CPI,international reserves,the degree of financial market development,the openness of capital account and fiscal solvency as the proxy variables through applying the theoretical and empirical method to analyze specifically and thoroughly,providing the theoretical basis for the domestic relevant economic policy-making.