JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS ›› 2023, Vol. 0 ›› Issue (1): 61-75.

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Regional Contagion Effect of China's Systemic Financial Risks

DANG Yin1, MIAO Ziqing2, SUN Chentong3   

  1. 1. China University of Labor Relations, Beijing 100048;
    2. University of Chinese Academy of Social Sciences, Beijing 102488;
    3. Tsinghua University, Beijing 100084, China
  • Online:2023-01-15 Published:2023-12-13
  • Contact: DANG Yin, associate professor at China University of Labor Relations, Ph.D., mainly engaged in research on macroeconomics and finance, Email: dangyin1999@163.com.
  • About author:MIAO Ziqing, Ph.D. candidate at the University of Chinese Academy of Social Sciences, mainly engaged in research on big data and financial risk. SUN Chentong, postdoctoral fellow at Tsinghua University, mainly engaged in research on financial risk and financial cycle.

Abstract: Identification and resolving financial risks at regional level is an important part of the prevention of systemic financial risks. Based on the network analytical method and SIRS infection model, this paper investigates the correlation, relative difference and contagion of China's regional systemic financial risks from 2011 to 2020. It is found that the regional systemic financial risks among provinces present an obvious network form; the provincial correlation of financial risks is becoming closer. The provinces with remote geographical location, slower economic development and looser financial supervision are the concentrated areas of risk inflow, while the provinces with superior geographical location, rapid economic development and strict financial supervision are the main areas of risk outflow. Each province can be clustered into different plates in the regional systemic financial risk contagion network, such as the“net outflow”plate, the“broker”plate, the“two-way outflow”plate, and the“net inflow”plate, each plays a different role in the risk contagion network. Therefore, each of the provinces need to formulate plans in advance, strengthen the targeted control and monitoring, adopt regionally differentiated risk prevention and control measures, and promote regional economic coordination, reform and development, so as to better prevent and resolve the regional systemic financial risks.

Key words: regional systemic financial risk, network analytical method, contagion effect, SIRS Model