The Threshold Effect Of Different Types Of Capital Account Opening On The Risk Of Commercial Banks

Since the 1980s,emerging economies have gradually abolished the control of cross-border capital in order to obtain the dividends of capital account opening.On the one hand,the crossborder influx of capital can make up for the capital gap,increase investment opportunities and develop a country’s economy;On the other hand,the frequent inflow and outflow of funds also increases a country’s financial vulnerability,which is easy to lead to financial crisis.Argentina,Brazil and other Latin American countries opened relatively early.They chose a more radical and fast-paced form of opening up.They opened their capital accounts when the countries did not meet the conditions for opening up or the control was not in place,which eventually led to the outbreak of debt crisis and even financial crisis.Some Asian countries,such as India and China,opened later than Latin American countries,and the opening process was gradual and cautious.This enables these countries to minimize risks when experiencing the global financial crisis.The opening-up experience of emerging countries makes scholars pay more and more attention to the relationship between capital account opening and financial system risk.Because commercial banks play a leading role in the financial system,bank risks can easily spread to the whole financial system through various ways,leading to financial crisis,and the opening of capital account further accelerates the transnational spread of risks.Under the open conditions,commercial banks not only face the problem of currency mismatch,but also reduce the risk identification of enterprises,and are very vulnerable to the impact of capital flow.From the examples of capital account opening in various countries,it is found that different initial macroeconomic conditions and different opening policies bring different crises to a country.Therefore,this thesis takes the three sub accounts of the capital account project:direct investment account,securities investment account and other investment accounts.As well as the overall openness of the capital account as explanatory variables to test its impact on the risk of commercial banks in emerging economies.Firstly,it expounds the concepts of capital account opening and commercial banks,and measures them with corresponding indicators.Secondly,it investigates the transmission mechanism of different investment projects to commercial banks’ risks,analyzes the threshold effect on commercial banks’ risks in the process of capital account opening,and then choose four variables:institutional quality,financial development level,inflation and trade opening as threshold variables and different types of capital account opening as explanatory variables,the study found that:(1)The radical openingup model is easy to induce financial crisis,while the gradual opening-up model can reduce the risk of external shocks.(2)Different types of capital account opening have different requirements for initial macroeconomic conditions.Generally speaking,the requirements for securities investment opening are the highest,followed by other investment opening,the last is the opening of direct investment.(3)The opening of securities investment and other investment brings greater marginal risk to commercial banks,while the opening of direct investment brings less marginal risk.(4)The opening of capital account should follow the principle of opening direct investment accounts first,followed by other investment accounts,and finally securities investment.This thesis selects emerging economies as samples to explore the threshold effect of different types of capital account opening on the risk of commercial banks from the two dimensions of theoretical level and empirical research,so as to provide some guidance for China to further steadily promote capital account opening.