Research On The Influence Of Financial Account Opening And Exchange Rate Fluctuation On Cross-border Capital Flow

Since the beginning of the 1990 s,the wave of economic globalization has promoted the process of global financial integration,which has led many countries to change their financial accounts from regulation to openness,and their openness has continued to increase.At the same time,the exchange rate has become a key factor in linking countries' currencies,and exchange rate fluctuations have an important impact on a country's economic and financial environment.With the opening of financial accounts and exchange rate fluctuations,large-scale frequent flow of cross-border capital on a global scale has become the norm,and many countries are in the midst of a violent flow of cross-border capital.For today's China,the opening of the financial account and the further marketization of the RMB exchange rate have become two hot issues in the policy of opening up to the outside world.And in the context of the global financial environment becoming more complex,China's cross-border capital flows are complicated and changeable,which has a turning point in the balance of payments,breaking the long-term maintenance of the "double surplus" pattern.On the one hand,the scale of cross-border capital flows is increasing,and the number of cross-border capital flows in a single quarter has frequently exceeded 100 billion US dollars and even exceeded 200 billion US dollars.On the other hand,the trend of two-way flow of cross-border capital flows is obvious.Therefore,considering the new realistic background,this paper mainly studies two issues.First,the impact of financial account opening on cross-border capital flows in emerging market countries and developed countries.Second,the impact of exchange rate fluctuations on cross-border capital flows in emerging market countries and developed countries.On this basis,it explores the significance of China's reference by analyzing the differences in the factors affecting cross-border capital flows between emerging market countries and developed countries.Based on the theory of asset portfolio,resource allocation mechanism and financial deepening theory,the paper analyzes the impact of financial account opening on cross-border capital flows.And based on the impossible trinity,interest rate parity theory,the paper analyzes the impact of exchange rate fluctuations on cross-border capital flows.Combined with theoretical analysis,this paper takes 11 emerging market countries and 10 developed countries as research samples,and selects the relevant quarterly data from 2000 to 2017 to construct a panel regression model for empirical testing,in the case of setting economic growth rate,inflation level,real interest rate,VIX index,and Fed fund rate as control variables,analyze the correlation between the sample countries Chinn-Ito index,the local currency against the US dollar exchange rate and cross-border capital flows.And exploring the impact of financial account opening and exchange rate fluctuations on cross-border capital flows.The conclusions of this paper are as follows: First,the opening of financial accounts has a significant positive effect on cross-border capital flows in emerging market countries,but it has less effect on cross-border capital flows in developed countries.Emerging market countries should pay attention to the impact of financial account opening on their economic and financial security.Second,exchange rate volatility has a significant impact on cross-border capital flows in emerging market countries and developed countries.Whether it is emerging market countries or developed countries,the appreciation of the national exchange rate will help promote cross-border capital inflows and increase in total capital flows,and vice versa.Exchange rate fluctuations and formation mechanisms are very important for countries.According to the difference of empirical results between emerging market countries and developed countries,some suggestions for the management of cross-border capital flows in China are put forward: grasp the inevitable trend of opening financial accounts,and proceed steadily with a prudent attitude;the RMB exchange rate formation mechanism is further marketized and steadily enhance the two-way floating flexibility of the RMB exchange rate;actively advocate and promote the coordination of international monetary policy,improve the ability of global financial markets to resist risks;pay attention to the improvement of domestic real economy industry competitiveness and promote long-term growth of domestic economy;follow the two-dimensional management framework of “macro-prudential and micro-regulation” of cross-border capital flows strictly,and improve the monitoring and early warning mechanism.