Research On The Impact Of Financial Openness On Systemic Financial Risks In China

Systemic financial risk has always been a key concern for scholars in various countries.The country’s financial opening policy will also have an impact on the accumulation of systemic risks,which in turn will have an impact on the country’s macroeconomic environment.In recent years,under the complex situation of tariffs imposed by the United States on China and the new crown epidemic,China still insists on its external opening policy without wavering,and carries out industrial upgrading and reform internally,so the financial opening policy is both a challenge and an opportunity for China at present.The article firstly clarifies the concept of systemic financial risk,and then further studies the causes,measurement methods and transmission mechanisms of systemic financial risk,which provides a theoretical basis for the subsequent construction of systemic risk stress index.Secondly,the article also defines the concept of financial openness,and then explores the financial openness of China since the reform and opening up,and finds that China’s financial industry is gradually opening up to the outside world and has achieved initial results.In the process of indicator construction,the article constructs a systemic financial risk composite indicator(FSI)containing nine sub-market dimensions based on the latest monthly economic data from 2012 to June2021,and measures the financial openness at the de facto level and the statutory level separately.Then a TVP-VAR model with 10,000 samples using Monte Carlo simulation is introduced to sample the model parameters for estimating the time-varying relationship between openness and risk.After that,the impulse response functions at particular time points are further regressed to explore the robustness of the model constructed in the article at different time points.Finally,policy recommendations for preventive measures against systemic financial risks in the context of financial openness are given based on the results of the model.The main conclusions of the article are: first,the inhibitory effect of fact-level financial openness on systemic financial risks is more obvious in the short run,but it will accelerate the accumulation of risks in the long run;second,statutory-level financial openness has a significant inhibitory effect on systemic financial risks overall;third,in general,the effects of statutory-level financial openness and fact-level openness on financial risks differ greatly and have Fourth,the impulse response function analysis at different time points shows that the impact of de facto financial liberalization and statutory financial liberalization on systemic financial risk is basically consistent at different time points,so the empirical results of this article are somewhat robust.The policy recommendations derived from the article are mainly four: first,regulators should strengthen macro-prudential management;second,in order to reduce the time-lag effect of financial opening at the statutory level,management should optimize the regulatory process;third,financial market opening is a gradual process,in which coordination of financial opening,that is,coordination of financial opening at the de facto and statutory levels,should be paid attention to;fourth,regulators must take into account the overall situation and introduce preventive policies against foreign capital.