Research On Stability And Risk Contagion Of Chinese Banking System Based On Complex Network

The complexity of the Chinese financial system and the diversification of participants have injected vitality into the Chinese economy,but also buried huge hidden dangers.The economic crisis in 2008,the stock disaster in 2015 and the collapse of Baoshang bank in 2019 all caused great damage.Therefore,it is very important to study the infection mechanism and stability of inter-bank bankruptcy to prevent the systemic crisis of banks.When using the lending data of China’s interbank market in 2019 and referring to the theoretical framework of Haldane & May(2011),I analyze the characteristics and risk contagion effect of China’s interbank market by using the research methods of maximum entropy theory,centrality method,minimum spanning tree and balance sheet impact.When analyzing the characteristics and stability of China’s interbank market,I use the centrality method to find that China’s interbank market has the cluster effect to large banks in borrowing funds,lending funds and acting as an intermediary,but it has the same characteristics of ease in capital lending.In addition,when using the simulation of minimum spanning tree,it is found that in the most stable bank structure,small banks also occupy important nodes and become the center of the whole network structure,but there is still a large proportion of large banks on the connection line.Last but not least,when analyzing the risk contagion effect of China’s inter-bank market,I use the interbank balance sheet to simulate the risk contagion effect of China’s inter-bank market by means of credit shock,liquidity shock and portfolio shock.It is found that if the industrial and Commercial Bank of China is in trouble,the credit shock has little impact on China’s banking industry.However,the impact of liquidity shocks is more significant than credit shocks.Discount rate and rollover rate play an important role in determining the contagion effect.If credit shock and liquidity shock occur at the same time,the contagion effect will be amplified.