Abstract

Research on systemic financial risk early warning index system in China

Author(s): Dilong Xu, Shuanglian Chen

The main idea of this paper is to deal with the subjective randomness of index selection in the construction of financial risk early warning index system, which can improve the scientific nature and rationality of the indexes’ constructs. Therefore, the author analyzes the influencing factors of the Chinese financial risk and then preliminarily selects systemic financial risk early warning indexes from four aspects, which are macroeconomic operation, medium financial markets, micro banks and external shocks factors. After that, on the basis of the comprehensive and representative principles, this paper further screens the primary indexes by using the methods of identification analysis and correlation analysis and constructs the Chinese systemic financial risk early warning index system with 18 indexes, which is different to the previous work. At last, the paper verifying this index system is the most appropriate one that can reflect Chinese economic and financial practice better by testing the robustness of the index with the data from January in 2000 to December in 2013