Abstract: The composite index method has such features as simplicity, clearness, flexible operation and continuous timing sequence. By employing the composite index method to synthesize financial security index, this paper conducts a comprehensive assessment of China’s financial security through the changes in the index. The results show that China’s financial security index from January of 2005 to March of 2014 shows a fluctuating trend, when taking into special considerations of such factors, which would lead to liquidity risks, as the off-balance sheet business, the interbank business and the impact of subsidiaries. This trend generally coincides with the trend of historical changes in China’s financial security situation, indicating that the synthetic financial security index can basically reflect the real situation of China’s financial security.

Key words: financial security index; financial safety evaluation; principal component analysis method