Dissertation > Excellent graduate degree dissertation topics show

A Research on Contagion of Subprime Crisis

Author: SongXiaoTong
Tutor: LiuPan
School: Southwestern University of Finance and Economics
Course: Finance
Keywords: Subprime mortgage crisis Infectiousness Transmission channels Granger causality test
CLC: F224
Type: Master's thesis
Year: 2010
Downloads: 362
Quote: 1
Read: Download Dissertation

Abstract

2004-2006 Fed's 17 consecutive rate hikes lead to the rapid cooling of the real estate market, the subprime problems first emerged. In March 2007, New Century Financial declared the brink of bankruptcy, the outbreak of the subprime crisis in the United States. Subprime crisis, also known as the subprime crisis originated in the U.S. sub-prime mortgage of defaults and causes associated with the secondary bond prices fell sharply, eventually evolved into a global economic crisis. Many international well-known financial institutions in the sub-prime crisis have erupted in huge losses, even bankruptcy. The crisis has not only led to the volatility of global stock markets, currency markets and triggered floating liters of the commodity price, the final damage to the real economy. China as an important part of the world economy at the beginning of the crisis, due to the strict control of the capital market, the impact is relatively small, but with the global economic downturn, the sub-prime crisis through the capital market, the import and export trade channels, the exchange rate channel the impact of infection on China gradually deepened. Although more than two years, governments have been introduced to restore economic policy, so that after 2009 the world economy gradually pick up, but the crisis is still not over, the next round of crisis may break out at any time, it is necessary channels of Contagion analysis, and based on the results of the development of relevant policy to make our country better able to resist infection of the financial crisis, to provide protection for the steady development of economic health. The sub-prime crisis transmission channels as the starting point, through empirical research, analyze the subprime mortgage crisis spread to our channel and our measures to be taken. The first purpose of the topic background and topics of significance forth summarized transmission channels for the international financial crisis, foreign infectious analysis of the financial crisis began in 1992, the European currency crisis, early research focused on the Crisis Contagion whether proof of the existence. With further research, foreign scholars gradually from an empirical point of view to prove the existence of contagious. With the outbreak of the financial crisis, have become increasingly frequent, Research International contagious financial crisis has brought to the forefront of the theory of domestic content in this area to introduce foreign research. The second part of the article describes the theoretical basis of the international infectious subprime mortgage crisis. World Bank infection is defined as three categories: generalized infection, strict infection and very strict infection. The generalized infection refers crisis across borders delivery or spillover effects across borders. Infection is not necessarily associated with the crisis, can occur in a period of crisis, can also occur in the stationary phase, but has been strengthened and enlarged the contagion effect of the crisis period. The strict infection is to pass the crisis to other countries, cross-border than any basic association and common shocks between countries. Very strict infection relative to the normal period, increased significantly during the crisis, cross-correlation. As the subprime mortgage crisis originated in the most developed economies, the financial regulatory system is the most developed of the United States, it spread to the scope of the Japanese deep economic destruction is unprecedented. Thus international infectious sub-prime crisis and the financial crisis of the past few times compared embodies many new features. Mainly include: (1) infection path diversity and complexity. (2) infectious speed shortcut. (3) the wide range of infection. Conduction of the subprime crisis to the world a variety of channels, including: (1) trade transmission channels. Trade pathway is the main way of the international transmission of financial crisis, caused by the spillover effect. The trade the infectious channels is a national financial crisis led to another closely related to its trading countries balance of payments and economic foundation run deterioration. (2) channels of financial contagion, financial contagion channels is a country's financial crisis may cause its lack of liquidity in the market, thereby forcing financial intermediaries to liquidate its assets on the market, through channels such as direct investment, bank loans led to another and its close financial linkages, lack of liquidity in the market, triggering a financial crisis in another country. Financial channels can be further subdivided into direct investment channels, the channels of banking channels and the capital markets. (3) The exchange rate transmission channels. Exchange rate movements is the most important factor affecting foreign trade. Exchange rate changes, the first performance in the import and export trade volume changes, the impact of the subprime mortgage crisis also the first conducted by the exchange rate mechanism to the area of ??trade, and in turn to the capital markets, especially the stock market conduction. (4) the expected transmission channels. The expected transmission channels, also known as pure transmission channels, it is even if there is no direct trade and financial ties between the countries, the financial crisis may be contagious. The the expected transmission channels contagion because investors expected the change. In the sub-prime crisis, it is expected that infection by herding and multiple balanced self-realization mechanism. In the third part of the article, prove through empirical analysis of the subprime crisis on the world capital markets, especially China infection. Given the drawbacks of traditional testing methods, this paper mainly uses econometric theory of stationary test, cointegration test, Granger causality test and impulse response function to test the subprime mortgage crisis in the international infectious. Data selection and processing, we divided the sample period into two sub-cycles, including the January 9, 2007 to 2007, this period is known as the stationary phase, the crisis impact in the United States, the mainstream of public opinion The subprime mortgage crisis is the main problem of the U.S. financial market. Since December 1, 2007 for the infectious period of the financial crisis in the world within this phase of the pessimism about the economy in the United States and the world are expected to gradually increase the crisis to the proliferation of the world, the global economic and financial crisis has erupted. The fourth part of the subprime mortgage crisis on China's contagious and revelation. The early stages of the crisis, the surface, due to the strict control of China's capital market, the subprime mortgage crisis on China is not like Europe and Japan and other developed countries are so serious, but with the severity of the crisis deepened, the world's largest trade exporter not sit idly by, the crisis began to affect all aspects of our economy through a variety of channels. The impact of the subprime mortgage crisis on China can be divided into direct and indirect effects. Directly affect the export trade, including the impact on China's macroeconomic impact, the impact of China's banking industry and the impact of foreign exchange reserves and the exchange rate. Indirect effects include the impact on China's stock and property markets. Chinese macroeconomic subprime mortgage crisis triggered inflationary pressure, caused by the government's macro-control more difficult. Fed to stimulate credit growth, continue to lower interest rates, causing the dollar in a weak position, so as to dollar-denominated oil and other commodity prices soaring, so China is facing growing imported inflation. China's economic growth, the contribution of foreign trade to GDP of 50% -60% of over-reliance on exports and economic growth, while the proportion of consumption in the economy is declining. The United States is China's large trading partner, after the outbreak of the subprime mortgage crisis, the slowdown in the U.S. economy, causing the American wealth, reducing consumption, thus greatly reducing the demand for imported products, a direct result of the decline in U.S. imports from China . In addition, the depreciation of the dollar led to decrease in China's price advantage. The high dependence on the U.S. market, the U.S. recession had a greater negative impact on Chinese exports. China's commercial banking system, due to the limited number of holdings of subordinated debt, subject to the direct harm and impact is not very serious, but it is worth mentioning that the subprime crisis revealed problems in the international financial markets and institutions to the financial institutions in our country The healthy operation brings inspiration and warning. Hold large reserves, the subprime crisis led to the depreciation of the dollar has brought huge losses to the country's foreign exchange reserves. In addition, the subprime mortgage crisis also indirectly affect China's stock and property markets. Empirical analysis to prove that the linkage between China's stock market and the U.S. stock market is strengthening, the subprime crisis of investors suffered huge losses in the domestic capital market. The subprime mortgage crisis has had a serious impact to our country. However, the long-term point of view, the adverse impact on the contrary, it could further reform and improve the birth of China's financial system, as well as our country began to reflect on the response to the measures of financial contagion: strong macro-control efforts should first take effective fiscal policy and monetary policies, while strengthening risk control and management of the property market and the stock market; Second, to strengthen the supervision of financial institutions. China should strengthen mutual cooperation between the regulatory bodies, the development of a sound financial legislation, and actively participate in the exchanges and cooperation of international financial regulation. Third, change the over-reliance on exports, the positive change in the export trade growth mode. Adjust the structure of export markets and export products, speed up industrial upgrading of export enterprises, to strengthen export bad debt risk management, improved export insurance, expand domestic demand and promote the stable development of the economy. Finally, the establishment of a crisis early warning mechanism. As soon as possible to set up a financial crisis early warning committee responsible for the supervision of the relevant industry risk profile should be the establishment of a series of early warning indicators, and gradually improve the information collection system. Finally, the article pointed out that the opening up of China's capital market is the trend, in the future will face an even greater crisis and challenges, only to take preventive measures at an early stage in order to provide a good environment for the economy fast, steady and healthy development of our country.

Related Dissertations

CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
© 2012 www.DissertationTopic.Net Mobile