Impact Of Short-term International Capital Flows On The Stability Of China's Commercial Banks

With the deepening of global financial integration,the scale of international capital flows have deeply increased.The reform of China(Shanghai)Pilot free trade zone,aimed at promoting the convertibility of capital account and financial services,and the event of RMB into the currency basket which is a symbol of the RMB internationalization have displayed that China has taken active into the world financial market.Although International capital flows can bring benefits to a country,it also increases the risk at the same time.Short-termism has become the main feature of capital flows in developing countries.Due to its speculative,volatile and reversible characteristic,short-term international capital flows have made a great challenge on the stability of the financial system.Since the financial market in China is dominated by commercial banks,short-term international capital flows will have impacts on the stability of China's commercial banks.Through theoretical analysis method and econometric analysis,this thesis analyzed the impact of short-term international capital flows into China's twelve commercial banks.According to the analysis results,suggestions to promoting the stability of China's commercial banks will be put forward under the new situation.Firstly,this thesis introduced the concept of short-term international capital flows and the stability of commercial banks,and reviewed the theory of the influence of short-term capital flows on the stability of China's commercial banks.Secondly,the paper summarized the classical theory related to the stability of the commercial bank affected by the short-term capital flows,and made an analysis of the mechanism and route regarding to the short-term capital affecting the stability of the commercial bank.Then,with the method of Foreign Currency Exposure Analysis and Value at Risk,this thesis calculated the exchange rate risk on China's commercial banks.By using the data from the financial statement,this paper analyzed the credit risk and liquidity risk the commercial bank faced caused by the short-term capital flows.The result of this research shows that the current exchange rate risk,credit risk and liquidity risk are the main risk points to the commercial banks.Finally,according to the problem found in the risk management of commercial banks,this paper put forward some suggestions about supervision and management of commercial banks under the new situation of the economy.